Sugar Prices Explained

As you can see sugar prices are fluctuating. But why is that? And is there a way to predict the price of sugar?

Why are sugar prices fluctuating?

Generally, the price of sugar threads along with the production costs and economic activity however, as demand and supply alternatingly increase and decrease other factors arise and contribute to sugar price’s volatility.

1. Global Sugar Stock

The common factor that affects all commodities. The low stock of sugar in the international market shows 2 important things: low supply, high demand, or a combination of both.  

Obviously, any movement from these will determine the sugar price in the market.

2. Oil Prices

Sugar cane is capable of producing ethanol (flammable and renewable energy used as an additive to automobile gasoline ). Ethanol is a top competing product in the transport market.

Thus, the volatility of oil prices reflects sugar prices in international trade.

3. Weather Conditions

Sugar cane thrives in warm climates and typically tropical countries are susceptible to droughts and extreme weather temperatures. 

Brazil, the top sugar-producing country experiences constant drought for four years had its cane sugar and ethanol production down by 28.8% and 22%, respectively in 2021. This led to the rising crude oil prices in the market.

4. Production Cost

Not only the leading sugar producer but also the top sugar exporter in the world, Brazil is increasingly dominating its role as the big supplier of raw and refined sugar.

Like most other commodities that are traded in US dollars, the price of sugar relies heavily on the exchange rate between the dollar and the real. A strong US  dollar against the Brazilian real means low production costs which in turn impacts sugar prices.

5. Changes in Demand

Consumer preferences ultimately influence sugar demand. For example, the demand for sugar products is high during the holiday seasons like Christmas and Valentine’s Day. 

Conversely, the increasing healthy diet fads also shake the sugar supply in the market.

Which variables impact the price of sugar?

• Weather Conditions
• Global Supply and Demand
• Government Policies
• Health Concerns and Consumer Preferences
• Ethanol Production
• Currency Exchange Rates
• Competition from Alternative Sweeteners

Where does sugar come from?

Evidence suggests that sugarcane first evolved in Southeast Asia sometime around 4,000 B.C. The invention of manufacturing sugar granules from sugar cane originated in India in the early centuries A.D.

Sugarcane cultivation and manufacturing began in the West Indies and tropical Americas in the early 16th century followed by improved production in the 17th through the 19th century.

Presently, the world is enjoying various sweet treats from intensified sugar production. Brazil accounts for 50% of sugar production globally followed closely by India, Thailand, China, and the United States.

When is the sugar season?

Location and weather conditions are the top determiners of sugar season. In tropical and subtropical countries, the sugar season runs from June to December.

In Brazil, the sugar season goes from May to December. This period is a series of harvesting sugarcane through machines and processing them to sugar produce, ethanol, and other products.

In India, the sugar season starts in October or November and lasts until March or April. Indian farmers cultivate and harvest sugarcane manually.

Additionally, the sugar season in India differs from region to region as climate and soil conditions vary from place to place.

In the United States, two sugar sources are present. Sugarcane season in Florida, Louisiana, Texas, and Hawaii begins in October to March or April. The sugar beets season in the Midwest and Great Plains generally runs from September to November.

Overall, the constant sugar production throughout these countries is coupled with varying demand and prices in the market.