Sugar is the main sweetener in food and beverage applications across the world. Apart from its sweet taste, sugar has many other functions in food technology which make it hard to replace in food applications if a “clean label” shall be maintained. The most important of these is that it acts as a natural preservative, texture modifier, fermentation substrate, flavoring and coloring agent, and a bulking agent.Key facts about the global sugar market
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Key themes affecting the sugar market
Sugar can be produced from both beet and cane with the latter accounting for about 80% of global output.
Sugar is a heavily politicised commodity and the sugar industries of most countries are operating behind high tariff barriers to protect them from international competition. Heavy subsidies to farmers or minimum prices also have effects on production levels and consequently globally traded volumes. India is a case in point as cane farmers form an important part of the vote bank in some states and politicians’ desire to keep them happy influences policy disproportionally to the sector’s overall importance for the economy.
That said, reform of individual country’s sugar policies can have important repercussions for global trade flows, as has been the case in the wake of recent reforms of EU sugar policy and more recently in Thailand that is the world’s second-largest exporter after Brazil. Subsidisation and protection from foreign competition has also made Russia the world’s largest beet sugar producer from the world’s largest importer in less than a decade.
In the context of climate change and the growing water scarcity in many parts of the world there is the expectation that sugar beet, which has a lower water consumption than cane, might gain market share when compared to cane.
With the rise of the fuel ethanol industry in Brazil and Asia an increasing tonnage of cane juice and molasses is processed into fuel ethanol. Sugar pricing has therefore become connected to energy prices as Brazilian mills have invested in increasing their flexibility to switch from sugar production to ethanol and vice versa. The 2018/19 sugar year has shown that this can affect 10 million tonnes of sugar from one season to the other – or about 15% of the globally traded volume.
With the expansion of the fuel ethanol sectors in Asia - particularly key sugar producers such as India and Thailand - this connection with energy markets could become even more important in the future.
| Sugar price ranges | ||||
| 2017 | 2018 | 2019 | ||
| #11 NY raw sugar futures (c/lb) | 12.50-21.20 | 9.90-15.35 | 10.75-13.55 | |
| #5 London white sugar futurs (USD/t) | 355-565 | 300-400 | 294-360 | |
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