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Research Outline
Prepared for Einars | Delivered August 8, 2019
Global Sugar Market
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Goals
Provide detailed insight into the current and future (through the first half of 2020) trends of the global sugar market, including supply, demand, price forecasts and market risks in order to inform investment decisions.
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Early Findings
Demand
Based on a report published in May 2019, global sugar demand is expected to rise due to
increases in consumption
in Egypt, India, Indonesia, and Pakistan. In turn, this will cause sugar stock in India, China, Pakistan, and Thailand to decrease.
That same report projected consumption to
increase for the USA
, Brazil, and Mexico but decrease in the European Union and remain flat in China.
However, more recent sources published in August 2019 state that
global demand may be declining
.
Supply
According to a report published in May 2019, for marketing year 2019/2020, global supply of sugar is forecast to increase by
2 million tons to 181 million tons
(raw value).
This same report stated that this increase is being driven by
higher production
in Brazil and the EU, which is offsetting a decline in production of 8% in India.
However, more recent sources, published 08/06/2019, indicate that
production will decline
for 2019/2020.
The head of the International Sugar Organization, Jose
O
r
i
v
e
, indicated that he expects a "
global sugar deficit
of about 3.5 million tonnes in 2019-20, growing to nearly 6 million tonnes in 2020-21."
Prices
As of July 2019, the price per pound of refined sugar on the global market was
USD 14.60 cents
per pound. For the entire second quarter of 2019, the average price was
USD 15.04
cents per pound.
According to a report published April 2019, per kilogram, global commodity sugar was at
USD $0.28
in March 2019. This is projected to increase to USD
$0.29
by 2020 and USD
$0.30
by 2021.
On August 8th, 2019, Sugar #11, considered "
the benchmark for trading raw sugar around the world
", was trading at
11.41
U
S
c
(updated every minute, so price may fluctuate).
Market Outlook (Risks and Opportunities)
The global sugar market has been struggling since 2018 with
record-low prices
(down to nearly USD 10 cents per pound in September 2018).
These low prices caused many governments to
increase sugar subsidies
, which led to an overproduction of sugar and now high stocks.
It is forecast that prices
may begin to recover,
however, it will be a slow recovery as sugar stocks need to decrease before prices will increase.
General market uncertainty is due to
unpredictable weather conditions
and the
potential for government policy
to impact the market.
In recent years, the market has been hard hit by "
the war against sugar,"
which has led to decreasing consumption.
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