A global sugar market crisis is looming: Drought, floods and export restrictions are hitting the market

By: Trademagazin Date: 2024. 09. 26. 09:47

The world sugar market is currently facing major challenges as major production problems have arisen in Brazil, Thailand and India. Forest fires, drought and heat have reduced sugar production in Brazil, while floods threaten crops in Thailand. At the same time, India introduced export restrictions to protect the domestic market while ramping up ethanol production. All of this puts serious pressure on the global sugar supply, which may lead to further price increases.

Brazil: The biggest producer in trouble

Brazil, the world’s largest sugar producer and exporter, has been battling severe forest fires, heat and drought in recent months, which have caused significant crop damage. This creates a huge global supply gap that Thailand and India could try to fill. At the same time, both countries face their own difficulties.

Thailand: Floods and insecurity

Thailand, the world’s second-largest sugar exporter, expects to produce 10.6 million tonnes of sugar for the 2024-25 season, up from 8.8 million tonnes the previous year. However, September’s floods were a warning about weather risks. If the rain continues into November, it could delay both harvesting and processing, which could put further pressure on the market.

India: Ethanol production at the fore

India’s situation is further complicated by the government’s goal of ramping up ethanol production, which may come at the expense of sugar production. The country’s sugar production is expected to decrease by 2 million tons compared to the previous season, and will only be around 30 million tons. Due to export restrictions, the international market is likely to see little of this volume as India prioritizes its domestic needs. The possibility of export is still questionable, although domestic stocks would in principle be sufficient for some exports.