Bitter future? World sugar shortage predicted
The world is facing what appears to be a sugar shortage. A lack of deliverable sugar before Friday's deadline drove the May white sugar futures contract to its highest level in more than a decade.
John Stansfield, senior sugar analyst at DNEXT Intelligence, told Bloomberg that the number of contracts to close, also known as open interest, implies a sizeable delivery, exceeding 880,000 tons, adding that those with short positions “have no the physical sugar to offer”.
White sugar futures are up nearly 20% in the past three weeks, reaching levels not seen since November 2011.
The price hike, which will increase costs for food producers of various items such as soft drinks, candy and baked goods, will keep pressure on global food inflation.
Bloomberg explains that the sweetener shortage is global: Sweetener prices have increased due to limited export prospects from India, the country's top exporter, and tight supplies from Thailand, Europe, China and Mexico.
India is a major exporter of white sugar, but shipments are controlled by quotas that are nearly depleted and no real increase is expected, said Soren Jensen, a senior market analyst. India's refining industry may soon have to switch from domestically produced raw sugar to imports, possibly from Brazil. The South American country has just started harvesting, but there are transport bottlenecks also as sugar is competing for space with the record soybean harvest.
Production estimates for the 2022-23 season will exacerbate the global shortage, according to Wilmar International Ltd. head of analysis Karim Salamon, who warns: “ Next year's crop probably won't be better. “Cane and beet acreage is likely to decrease in most areas due to the effects of competition between crops.”
Even in Italy, which has 4 million hectares uncultivated, beet cultivation saw an impressive 60% decline from 2006 to 2017.
By dint of declining crops in the West, especially in Italy, the offer is in any case declining and therefore, sooner or later, a dangerous scarcity is created. Who knows, maybe we'll go back to building sugar factories here too, after having demolished them in the last 25 years…
The increase in sugar prices will have a heavy impact on the price of confectionery products, and not only, with the risk of flaring food inflation.
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The article Bitter future? Predicted world sugar shortage comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/futuro-amaro-prevista-una-carenza-mondiale-di-zucchero/ on Fri, 14 Apr 2023 09:00:03 +0000.