Global Sugar Production and Consumption: After a Price Surge in May 2023

The average global price of sugar soared in May 2023. World Bank data shows that the price reached US$0.56 per kilogram (kg). This represents a 5.6% increase compared to April 2023 (month-on-month/mom) and a 30.2% surge compared to May 2022 (year-on-year/yoy).

The Food and Agriculture Organization (FAO) stated that the price increase in May 2023 was the highest since October 2011, marking a decade high. The FAO attributed the increase to tightening global supply and conditions in the world's largest producers and exporters, such as Brazil.

"The upward price pressure is due to the slow start of the 2023 harvest in Brazil, caused by heavy rains. In addition, the Brazilian Real has generally appreciated (increased) against the US dollar since December 2022, affecting exports and contributing to higher global sugar prices," the FAO wrote in its June 2023 report.

The same report also compiled data on global sugar production, utilization/consumption, and export trade.

Production reached 169.1 million tons in 2020. The FAO estimated production in 2021 at 175.6 million tons. Its prediction for 2022-2023 is an increase to 177.5 million tons. The FAO's prediction for global sugar production is up 1.9 million tons, or 1.1%, from the 2021-2022 production.

Most of this calculation is based on the prospect of significant production recovery in Brazil.

"However, this estimate is below the FAO's initial expectations due to lower-than-previously-estimated output in China, the European Union, India, Mexico, and Thailand," said the FAO.

Consumption, however, exceeded production, reaching 170 million tons in 2020. The FAO estimates that sugar consumption in 2021-2022 increased to 174.5 million tons. Its projection for 2022-2023 is 176.1 million tons. This projection is up 1.6 million tons or 0.9% from the previous season.

Overall, the FAO stated that year-on-year (yoy) consumption growth largely highlights consumption from Africa and Asia, driven by population and income growth.

However, the projected increase in global sugar consumption is constrained by the projected slowdown in global economic growth in 2023 and high global sugar prices.

"The anticipated growth in global sugar intake, combined with the downward revision of global production estimates, will reduce the global sugar production surplus to 1.4 million tons from the previously estimated 4.9 million tons," wrote the FAO.

Finally, regarding trade or exports, the volume reached 60.8 million tons in 2020. The estimate for 2021 was 61.3 million tons. Interestingly, the FAO predicts a decrease in global sugar exports in 2022-2023, to 60.7 million tons. This is equivalent to a 1% decrease from the estimated volume of 2021-2022.

"This contraction is a result of anticipated reduced export supplies in the European Union, India, and Mexico, more than offsetting the projected larger shipments from Brazil," the FAO explained.

Regarding imports, the FAO says that slowing global economic growth coupled with high global sugar prices is expected to suppress global sugar demand.

In China, the largest international sugar buyer, imports are expected to decline for the second consecutive season amid high global sugar prices and adequate domestic availability.

"Conversely, sugar imports by the European Union are expected to increase sharply from last year due to high domestic prices and lower production," said the FAO.