Sugar has been a coveted commodity for centuries. Today, Brazil and India together produce more than half of the world's sugar and consume around 80% of their own output — a concentration that makes the global market for the remainder relatively volatile.
Sugar markets worldwide are shaped by local subsidies, minimum support prices, tariffs and import quotas. Japan, for example, has used these tools since 1995 to reduce its reliance on imports, though imported sugar still accounts for the majority of domestic consumption.
India's domestic sugar output rose sharply in the 2020–21 season as new mills came online, even as the government moved to reduce export subsidies. Indian sugar is exported mainly to Bangladesh, Malaysia, Sri Lanka, Iran, China, South Korea, Afghanistan and Somalia.
Brazil, the largest producer, was expected to expand cane production further, aided by a weaker local currency (the real) that favours exports over domestic ethanol production. China's relaxation of import quotas was also expected to benefit Australian raw-sugar exporters supplying South Korea.
Beyond production economics, sugar policy increasingly intersects with public health: several Asia-Pacific governments have introduced or considered sugar taxes to address obesity. Global sugar consumption was projected to grow at around 1.4% annually, reaching close to 199 million tonnes by 2029.
This market commentary is provided by Merchant Trade Guarantee Corporation Company Limited (MTG), a non-bank financial company specialising in trade and structured-finance consultancy since 2000.