Despite a recovery in prices since the beginning of the pandemic, higher sugar production is expected to negatively weigh the prices. Currently, mills are producing more sugar because the price of ethanol is low. In Brazil, the largest sugar-producing country in the world, the reduction in ethanol demand during the first two months of lockdown measures represented the equivalent loss in demand of about 4 million tons of sugar. Because of the direct link between sugar and energy markets, any escalation of tension in the Middle East can impact the price of sugar around the world as well, further weighing on sugar’s trading price. While baking and cooking at home has become an increasingly popular activity during the pandemic, the lack of driving (ethanol) and eating out (sugar) hasn’t helped to offset the revenue loss.
Similar to other industries, when the sugar trade is highly regulated and slow to liberalize, it can create challenges for buyers and sellers. If sugar prices are too high, then the producer is uncompetitive. If it is too low, sugar farmers and producers cannot profit. Efficient countries with low labor costs will fare better with low-cost sugar because they can still profit. Sugar is still a major crop for developing countries, whose GDP relies more on agriculture than other industries. European and American tariffs hurt farmers in developing states who cannot compete.
From a deficit of 5 million tons to a surplus of 10 million, the world is currently experiencing an unbalanced offer of sugar supply after COVID-19. On one hand, Brazil is expected to have a super harvest in 2021 with a 35% increase. Thailand and India are also expected to recover their production levels. Because the global consumption of sugar is still suffering from the lockdown, it is directly impacting this commodity.
Normally around September and October. Sugar cane grows for 12 to 16 months before being harvested between June and December each year. Sugar mills operate at a constant production rate but safety stocks of the raw material can’t be maintained because sugar quality deteriorates very quickly. Therefore, sugar cane is continuously sourced in diverse quantities and qualities from hundreds of geographically dispersed plantations.
Sugar is graded on the size of its granules - it is classified as S, M, or L meaning small, medium, and large sugar. When it comes to grading, the sifter controls both oversize and undersize in the material. A common example for quality assurance is grading sugar to simultaneously remove lumps and fine grains.
The International Commission for Uniform Methods of Sugar Analysis Ltd. (ICUMSA) grades sugar from a range of 0-6.
0 = maximum whiteness
6 = highly colored low-grade white sugar
In its purest state, sugar is made up of colorless, transparent crystals. Freshly squeezed from cane or sugarbeet, the solution will show a blue and black hue in liquid form. Due to the impurities from the cane or beers, the lime solution is added to precipitate or eliminate them. When the sugar cools, depending on the extent of the additional purification and crystallization process it undergoes, it will take on a color form scaling between 0 and 6. The more it is purified and crystallized, the whiter it becomes.
Purity. True purity is the sucrose content as a percentage of the dry substance or dissolved solids content. For example, sugar of 98 degrees polarized would contain about 98% sucrose. Sugar is highly sensitive to contamination and deficiency caused by dirt. Thus, it is important that sugar producers seek and conform to the accreditation and certification process to check quality standards.