White Papers CTRM for Sugar – Managing Sugar’s Complexity | Page 5

CTRM for Sugar - Managing Sugar’s Complexity

A ComTechAdvisory Whitepaper

The EU has announced the ending of sugar quotas in 2017
as well as the ending of the export limit and guaranteed prices
offered to sugar beet growers. This is widely expected to have
a significant impact on the players, supply chain and prices, as
European prices should fall to general world market levels. As
a result consolidation in the industry is expected as producers
and marketers jostle for position.
Since the cost of production of White Sugar within the EU is
relatively low (versus refined Raw Sugar), its production is expected to increase substantially after the EU market liberalization. With the ending of export limits, Europe’s position as a
net importer could change significantly.

SUGAR THE PHYSICAL MARKETS – RAW
AND WHITE!
As previously noted, sugar is derived from either sugar cane or sugar beets. Given that sugar sourced from Beet
requires a single stage of processing, beet sugar is always produced and traded in its “white” consumable form,
as opposed to cane sugar, which is traded in either a raw form after milling, or a white form after refining. Since
the refining step requires significant cost, white sugar is traded at a premium over raw sugar.

Raw sugar supply is very concentrated in Brazil and Thailand,
but raw sugar refining is more dispersed, as is consumption
of white sugar. Raw sugar trading has seen growth with the
advent of refineries being built near the ports where sugar is
imported and today a large portion of the global sugar trade
is in raw, or unrefined cane sugar, it is however a somewhat
consolidated and bulk orientated market.
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 (in particular on the North African Continent and the Middle East) has
helped re-direct some of the white sugar demand. Additionally,
low quality white sugars have begun to displace high quality
white sugars. Today refineries at destination represent 60%
of global white sugar exports. Since white sugar directly flows
to food industrials and end consumers, the white sugar market is much more fragmented than the raw sugar market. The
ten largest importing countries representing less than 45% of
white sugar demand, and almost endless number of specifications, logistic varieties and buyers.

© Commodity Technology Advisory LLC, 2016, All Rights Reserved.

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