Production Decline Expected in India and Other Regions
Global sugar prices are showing unusual signs. There are concerns that the rise in sugar prices may lead to higher prices for bread, ice cream, and other products.
According to the United Nations Food and Agriculture Organization (FAO) on the 16th, the global sugar price index last month was 127.0, about 9% higher than 116.8 in January this year.
The price index is a figure that compares prices based on the average price from 2014 to 2016 set at 100.
Looking at the fluctuations over the past six months, the global sugar price index rose from 108.6 in October last year to 114.4 in November, 117.2 in December, then fell to 116.8 in January this year, before rising again to 125.2 in February and 127.0 in March.
The sugar price index in March this year is about 17% higher compared to the index in October last year.
On the 11th (local time), the May sugar futures price traded on the London ICE Futures Exchange exceeded $702.5 per ton (t). This is the first time in 12 years since 2011 that the price has surpassed the $700 mark.
The recent rise in sugar prices is due to forecasts of reduced production in producing countries such as India, Thailand, and China.
However, last month, the price increase was limited as the sugarcane harvest outlook in Brazil was favorable.
Additionally, the Brazilian real weakened against the US dollar, and the decline in international crude oil prices led to more Brazilian sugarcane being used for sugar production rather than ethanol, which also helped limit the price increase.
Some worry that the rise in sugar prices will increase the cost burden on domestic food companies, leading to product price hikes.
If global sugar prices continue to rise, prices of domestic processed foods such as bread, snacks, ice cream, and beverages may also increase.
Last year, the Russia-Ukraine war and other factors caused global grain prices to rise, which in turn led to higher domestic food prices.
In particular, the sharp rise in flour prices increased cost burdens, causing four major domestic ramen companies to sequentially raise product prices in the second half of last year. This year, food companies have also successively raised prices of snacks, bread, and other products.
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