Why does the International Sugar Organization raise its forecast for global sugar supply shortage

The International Sugar Organization announced that it raised its forecast for the global sugar supply shortage in 2023/2024 to 2.954 million tons. The first reports of the adjustment were published on June 10, 2024, and were subsequently further reported and confirmed by multiple media outlets on June 11 and June 13. The International Sugar Organization forecasts a global sugar supply deficit of 2.954 million tonnes in 2023/2024 (October 2023 to September 2024), larger than the 689,000 tonnes forecast in February. The International Sugar Organization also revised its estimate of the global sugar supply gap in 2022/23 to a deficit of 1.153 million tons from its original estimate of 308,000 tons of excess.

The reasons for raising the supply shortage expectation of the international sugar market can be analyzed from the following aspects: First, the production changes of the major sugar-producing countries. Brazil is one of the largest sugar producers and exporters in the world. According to the recent data released by the Brazilian Sugarcane Industry Association, although the sugar-cane pressed volume and sugar production in the central and southern regions of Brazil have increased significantly year-on-year, But recent industry forecasts and analyst modelling suggest that sugar production in south-central Brazil may be lower than expected. And there are signs that some sugarcane growers are making ethanol, a biofuel, rather than sugar cane, in order to earn more money, which could also reduce sugar production. In addition, India is also an important sugar producer, according to the Federation of Indian Sugar Mills data show that as of 2023/2024 sugar production in India is expected to be close to 32 million tons, but this figure is still subject to weather, policy and other factors. For producers, exporters and consumers of sugar, there is a need to reassess and adjust sugar production, export and consumption strategies in response to possible market changes.

The second is the assessment of the International Sugar Organization, in the report released by the International Sugar Organization, the International Sugar Organization has assessed the supply and demand of the global sugar market according to the production expectations and consumption expectations of countries. Due to lower production expectations in some countries and changes in global sugar consumption, the International Sugar Organization has raised its supply shortage forecast for the global sugar market. At the same time, this adjustment also means that the supply shortage in the global sugar market is much more serious than previously thought, because of the increase in the supply shortage forecast, the global sugar price is likely to rise sharply, this significant change will directly affect the market price mechanism, and promote the price of sugar. Could have a significant impact on global sugar prices and sugar markets.

The third is the rise in energy costs caused by extreme weather and climate change, and the impact of extreme weather and climate change on sugar production is increasingly significant. Extreme weather events such as heat waves, droughts and pests and diseases can lead to reduced sugar crop yields. Energy costs, especially the price of natural gas and gas, have an important impact on sugar production. Rising energy costs may lead to increased production costs for sugar producers, and sugar is an important raw material for many food, beverage, bakery and other industries. With the rise in energy costs and supply shortage, it will have a huge impact on the so-called raw material industry, which will affect sugar production and the supply of the global sugar market.

In summary, the International Sugar Organization raised the global sugar supply shortage forecast for a variety of reasons, mainly from the sugar producing countries, the impact of climate and weather factors, and the potential rise in energy costs and other factors. The combination of these factors has led to a significant upward revision of expectations for global sugar supply shortages. At the same time, the International Sugar Organization raised the global sugar supply shortage forecast will bring a wide range of market, economic and social impacts, involving sugar price fluctuations, market supply and demand relations, trade patterns, and related industries. This not only reflects the actual supply situation in the global sugar market, but also may have a significant impact on the future sugar price and sugar industry market.