Sweet news on sugar prices

Sugar prices in the EU will remain low because of the abolition of production quotas, resulting in 19.5 million tonnes of sugar produced this year, according to predictions from analyst Informa’s Agribusiness Intelligence.

The global surplus in 2018/19 is seen at 7.2m tonnes compared with 7.3m in the current year. Also, the unexpectedly strong increase in Thailand and India’s sugar production this season has raised the global surplus in 2017/18 significantly above initial expectations. Current projections point to another massive surplus in 2018/19 which suggests prices will remain under pressure for the near future, says the analyst.

Its latest estimates show that the EU produced 19.5m tonnes of sugar in the 2017/18 season – 3.5m (+21%) more than the 16m produced a year earlier. This is due to the abolition of the quota system in 2017, which means that all sugar produced in the EU previously classified as non-quota sugar can now be sold for food use too. This, combined with a strong rise in sugar beet production has effectively made the EU self-sufficient for sugar in the first year after quotas were abolished.

“Despite new uses being developed for sugar such as ethanol, food consumption remains the major driver of the world sugar economy,” says Stefan Uhlenbrock, senior commodity analyst at Informa’s Agribusiness Intelligence. “After all, sugar produced must be used at some stage in order for it not to burden the market and put pressure on prices. On the basis of current trends, it may be reasonable to expect that world sugar consumption in 2019/20 will reach around 190 million tonnes.”