Reports CTRM for Agricultural and Soft Commodities | Page 32

CTRM for Ags & Softs

Sugar
Sugar is produced in more than 120 countries and global production is now more than 120 million
tons a year. Approximately 70% of this is produced from sugar cane, a very tall, grass-like plant
largely grown in the tropical countries. The remaining 30% is produced from sugar beet, a root crop
grown mostly in northern temperate zones.

Overview
The main consumer/business market for sugar is the food industry. Sugar is
used as a sweetener and to add texture and decoration to food items such as
‘Sugar, as the only convertible
cakes. It is also used in the manufacture of certain cereals and is a key
commodity in multiple derivative ingredient in the production of ethanol. Brazil is currently the world’s largest
markets,
requires
specific producer of sugar, producing over 30 million tonnes of sugar in 2006, which
CTRM functionality.’
accounts for around 20% of the total world sugar production. Brazil was also
responsible for almost 40% of the worldwide sugar export that year. A large
Jan van den Brom - Agiboo
portion of the sugar market stemming from Brazil is used to produce ethanol,
which is a crucial component of the Brazilian economy. India is the second
largest producer and the largest consumer of sugar, while the EU is the third largest producer.
The driver for raw sugar refining was established by Russia in the mid-1990s as a response to a declining beet sugar
production, and it was accelerated by the development of new, large autonomous refineries at destinations.

On the supply side, Brazil has increased its market share from 5% in 1986 to almost 75% in 2011 at the expense of the
other major exporters. On the demand side, the Former Soviet Union (FSU), the Middle East (major autonomous
refineries at destination in U.A.E, Saudi Arabia, Nigeria) and the Far East (with China as the major importer) account for
70% of the world’s import demand. A number of commercial advantages, including low variable costs for energy and
labor, economies of scale, political/regulatory, logistical factors – the substantial decrease of the bulk freight rates
compared to bagged rates in the 1990s, combined with efficient sugar terminals in South Brazil, Thailand and Guatemala,
has resulted in a move of refining to destination markets.
The expansion of the white sugar trade has been tied to the emergence of the EU as a large exporter and the rise of
sugar demand in the Arab world and Black Africa in the 1970s. For many years, the EU had a market share of 50% in
white sugar, but the growth of refining capacity at destination has helped remove some white sugar demand. Additionally,
low quality white sugars have begun to displace high quality white sugars, as well.

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