White Sugar Surplus

Posted by Daniel Workman Oct 10, 2007

Global sugar production is at such a high level that top sugar exporters like Brazil, Thailand and Australia are having trouble finding customers willing to buy their supplies.

Sugar importing countries now have their choice of suppliers, and are turning to the exporting nation with the lowest prices.

Sugar is used in many processed foods and beverages. Lower sugar prices provide a counterbalance to higher costs for wheat and other commodities affected by recent droughts around the globe.

Like many issues in international trade, bad news for exporters is good news for importers. A surplus of sugar will cut into the profits of sugar exporting countries, but reduces inflationary pressures in importing nations.

And like other international trade issues, ultimately we make decisions based on cold, hard statistics. No debate about whether white sugar is unhealthy, just numbers on exports and imports with a column in a spreadsheet with corresponding sugar prices. Right now, those sugary numbers look good for consumers and importers.

Sugar supplies and prices go through cycles. Without a compelling substitute for sugar, prices and supplies will work themselves out in the long term as farmers in producing countries plant fewer sugar plants. Instead, they may substitute scarcer, and therefore higher priced, commodities like wheat.

Leading sugar cane producers are Brazil, India, China, Thailand, Pakistan and Mexico.