Sugar Prices Explained

Sugar prices remained elevated despite varying outputs from its key country producers. India’s limited exports was offsetted by Brazil and Thailand’s bumper harvest, with a combine output of 30.70 million metric ton. This improved supply outlook made the International Sugar Organization to lower the global sugar supply deficit to -2.51 mmt.

However, experts warned of a possible sugar price spike due to Brazilian drought and excessive heat that damaged the country’s top producing estate of Sao Paolo. Up to 80,000 hectares of plantation were burned resulting in a reduced sugar production esttimate (44 mmt) in 2025.

Additionally, India’s prolong sugar export curbs to maintain its sugar reserves and support ethanol production will continue to mark a big gap on the global sugar supply. This is a supportive factor of increasing sugar prices.

 Why are sugar prices fluctuating?

1. Weather Conditions

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

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

2. Production Cost

The production cost of sugarcane and sugar comes after various essential inputs such as labor, fertilizer, fuel, machinery, and planting materials.

When the costs of these inputs rise, it directly reflects the overall cost of production for sugar producers. This heightened production cost affects the profitability of producers within the sugar industry. Therefore, producers either reduce supply or increase sugar prices in the market to sustain their profitability.

3. Fertilizer Cost

Sugar producers face financial challenges due to the increasing costs of fertilizers and high petroleum prices. The rising cost of fertilizers impacts the overall expense of cultivating sugarcane, as fertilizers are essential for crop growth and yield.

Additionally, high petroleum costs affect the price of fuel, which is important in various agricultural operations, transportation, and machinery. Thus, the escalation of input costs reduces the income and profitability of sugar producers, ultimately creating sugar price variation.

4. Oil Prices

Sugar cane produces 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.

5. Trade Policy

India (the second-largest sugar exporter) reduced sugar exports to support its domestic ethanol production and stockpile reserves because of the commodity’s supply volatility due to changing weather systems.

This scenario showcases how policy changes and government interventions can have immediate and tangible effects on commodity prices.

Which variables impact the price of sugar?

• Weather Conditions
• Production Cost
• Fertilizer Cost
• Oil Prices
• Trade Policy
• Consumer Preferences
• Government Policy

Where does sugar come from?

Evidence suggests that sugarcane first evolved in Southeast Asia sometime around 4,000 B.C. The invention of sugar granule manufacturing 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. International sugar trade further strengthened the European colonial powers in the Americas.

Furthermore, the sugar trade became possible because of transatlantic slavery as plantation owners relied mostly on the enslaved labor to work and process refined sugar.

Sugar cane and sugar beets are often harvested from fields. Plant components are gathered and transferred to a sugar mill for processing. Then, they are washed and sliced into pieces as soon as they arrive at the factory.

The pieced sugar cane (billets) are crushed or shredded to extract the juice, separating the fiber and juice. Next, the juice is evaporated in a series of vacuum pans to remove water and increase the sugar concentration.

The concentrated juice (it has a dark brown color and a syrupy consistency) is seeded with fine sugar crystals and cooled to induce crystallization. As a result, it produces a grainy texture and a caramel-like flavor (massecuite).

The massecuite is spun in a centrifuge to separate the sugar crystals from the liquid. Molasses (the separated liquid) are used as animal feed, fertilizer, and ethanol.

On the other hand, the sugar crystals ( raw sugar ) are transported to the refinery for further purification and processing.

The solution will decolorize the raw sugar, producing white sugar crystals. Presently, Brazil accounts for 50% of sugar production globally followed closely by India, Thailand, China, and the United States.

What is the future price of sugar?

Experts predict that sugar prices will remain elevated as crude oil prices fluctuate heavily. Brazil (the largest sugar-producing country) exports sugar and covers the output deficit from other key producing countries. While it holds 50% of global production, it reported declining output because of the changing weather patterns.

Also, the country’s intensified ethanol production that uses half of its sugarcane crop competes with the global customer needs. This supports the soaring sugar prices globally.

Moreover, India’s Ethanol Blended with Petrol Program localized the country’s production with more focus on domestic sugar production through government incentives program. While the country exports sugar on a limited scale, this reduced availability needs another output to cover the global need.

Overall, the constant sugar production throughout these countries is coupled with varying demand and prices in the market. Experts forecasted that sugar value will grow more than 50 cents per lb making it $100 in 2027.