El Niño threatens the global sugar market with shortages and rising prices

This is reported by Bloomberg.

Excessive rainfall in Brazil is slowing down the sugarcane harvest and its processing at mills. According to José Pessoa of the José Pessoa Group, due to delays and expected December rains, the country may reduce sugar exports by approximately 2 million metric tons.

In India, a weak monsoon has lowered the sugar production forecast to approximately 30 million metric tons. In Thailand, where rainfall in the northeast is about two-thirds of the 30-year average, production could fall by at least 17%—to less than 10 million metric tons.

Problems are also being observed in other regions. In Europe, a hot summer has worsened the outlook for the sugar beet harvest, while drought in the U.S. is delaying harvesting in some states.

According to Eder Vieito, CEO of Green Pool Commodity Specialists, sugar production losses are already significant in various countries. Rising sugar prices are also exacerbating inflationary pressures. According to Bloomberg, global sugar prices have risen by 18% this year, second only to vegetable oils in terms of price increases among the main components of the UN Food Price Index.

At the same time, further price increases could be tempered by slowing demand: consumers are cutting back on sugar consumption, and food manufacturers are adjusting their recipes. However, Citi analysts expect that, given unfavorable weather conditions, prices could rise by about 20% over the next 12 months.