Increasingly frequent summer heat waves are driving up sugar prices, and Europe is voicing concerns that soon consumers will have to pay more for sweet products. According to Bloomberg News, sugar producers and buyers are engaging in negotiations on contracts for the 2023/24 harvest season, which begins in October, and the price per ton of sugar stands at €1,000 on the commodities exchange, more than double the price it was in the middle of last year.
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The reason given was a significant decline in sugar production. In the previous season (2022/23), there was already a 12% drop compared to the season before. While large companies, and as a result, consumers, were protected from the sugar price hikes due to long-term contracts, prices have spiked by 58% since last October, and medium and small companies have been forced to dig deep into their pockets.
Warning signs for the future are already visible. The rain delayed planting this year by one month, and the warm temperatures since then have increased the risk of drought and pests that could destroy the crops. The situation is exacerbated by low sugar stocks, forcing companies to tap into their reserves. Nevertheless, some analysts believe that production levels will increase. The European Union estimates that production may reach 15.5 million tons this season compared to 14.6 million tons last year, with hopes pinned on Poland as one of the major producers to offset the decrease in production in France.
Pessimists speak of the "yellow virus," a disease that could decimate sugar crops. Given the restrictions on neonicotinoids in France, a type of pesticide that protects against the same yellow virus, experts estimate that sugar production in the continent may drop below 14.8 million tons.
HEAT WAVE LASHES ISRAEL AND EUROPE, TO LAST SEVERAL MORE DAYS
(ILTV)
These concerns spread beyond Europe's borders. Sugar worldwide comes from sugarcane grown in tropical climates, and sugar beet, which thrives in cooler regions. Extreme weather conditions affect both types of crops.
El Niño, which manifests by the unusual warming of surface waters in the eastern Pacific Ocean, threatens the sugarcane harvest in Southeast Asia and Africa while rising temperatures make Europe less ideal for sugar beet.