World sugar stocks will fall next season to their lowest in six years, as consumption accelerates its post-pandemic recovery, outpacing production growth slowed by a switch by farmers to high-priced grains.

Global sugar inventories will in 2022-23 shrink by 3.54m tonnes to 45.33m tonnes, the US Department of Agriculture said in its first forecasts for the season.

The drawdown, for a second successive year, will reduce inventories to their lowest since 2016-17, with the decline reflecting in particular expectations of a 1.9% expansion in consumption – double the rate of growth expected for production.

“Consumption is anticipated to rise to a new record due to growth in markets including China, India, Indonesia, and Russia,” the USDA said in a twice-yearly global sugar briefing.

Demand drivers

Chinese sugar demand was forecast rising by 300,000 tonnes year on year to 15.80m tonnes “on the assumption that Covid-related restrictions ease, including stay-at-home orders which currently limit sugar use”.

Russian consumption was seen growing by more than 400,000 tonnes to 6.14m tonnes, despite the country’s economic woes, as “higher supplies” encourage use, with domestic output seen expanding by 500,000 tonnes year on year to 6.50m tonnes.

Meanwhile in India, “consumption is anticipated at a record high” of 29.50m tonnes, up 500,000 tonnes from 2021-22, “with the expectation of continued favourable retail and institutional sugar demand”.

Cane vs corn

India’s sugar output, by contrast, will decline by more than 1.0m tonnes to 35.80m tonnes – a reflection of this month’s export ban, and the country’s efforts to promote its cane-ethanol industry, leaving less of the crop available for making sweetener.

“India production is forecast to decline… as less sugarcane is processed for sugar,” the USDA said, noting that “amid overseas sales, India issued a notification curbing exports of sugar to check domestic inflation and to channel more sugarcane into ethanol production”.

The decline will allow Brazil to retake top spot in world sugar output, with production of 36.37m tonnes.

However, that total, up 1.0m tonnes year on year, remains well below highs, and indeed is in line with the country’s trailing 10-year average, of 36.2m tonnes, with some growers switching land to other crops in the face of elevated grain prices.

“Harvested area is lowered as marginal sugar cane areas switch to soybeans and corn.”

Similarly, in Europe farmers will “reduce sugar beet plantings in favour of more profitable crops like corn”, which competes with beet in the spring sowings campaign.

‘Favourable rainfall’

Brazil’s improved sugar output will support growth in exports of nearly 1.0m tonnes to 26.62m tonnes.

However, the USDA underlined the recovery in Thai shipments, up 1.0m tonnes year on year to 11.0m tonnes, as the country’s sugar sector continues its revival from the drought year of 2020-21, when exports slumped to just 3.74m tonnes.

“Sugarcane production is forecast up to 98.3m tonnes in 2023.

“The rise in production is a result of a 3% rise in area harvested to 1.6m hectares and above-normal vegetative growth due to favourable rainfall.”