2023 International Sweetener Colloquium: Key Take-Aways
Last week, the IDFA and Sugar Users Association did an excellent job of gathering the sweetener industry to Palm Springs, CA to network, make deals, learn and have a bit of fun in the somewhat chilly desert.
As usual, the speakers did not always agree on everything; however, there were some key take-aways. The list is not comprehensive, but rather includes a bit of past year analysis and future year predictions:
1. Sugar Prices Will Remain High
A combination of sustained demand for sugar globally and a slightly decreased supply means there will be no relief for sugar prices in the short-term (and maybe long-term). The effectiveness of sugar reduction strategies has taken a pause, high corn syrup prices, domestic supply challenges, and inflationary factors are a formula for high prices.
2. Tier 2 Imports are Historically High
With world sugar prices less than half the cost of domestic supply, Tier 2 imports are desirable and necessary sources of raw sugar to keep the refineries humming. Of course, this adds to the final cost a buyer must pay for their sugar.
3. Defending the Stocks/Use Ratio
Though we have higher demand and a greater frequency of catastrophic weather events, there is no interest in changing that ratio by the folks at the USDA.
4. Competition from Other Commodities
To defend the high domestic prices for sugar, Robert Johansson, of the American Sugar Alliance offered evidence that indeed prices for domestic beet growers are not high enough with corn offering a better ROI than sugar beets. No data was offered for 2022.
This theory was echoed by Barb Fesco, branch chief for the USDA who manages the sugar program. “We only have so much land. If you want a sustainable supply of domestic sugar, you have to pay (the farmers) a price that is equivalent to their next best alternative”.
5. Sustainability Initiatives Move from Theory to Practice
With demand for sugar increasing and competition from other crops, the need to save money and increase productivity via improvements in agricultural practices remains a topic of high interest.
Western Sugar reported on their GHG initiatives funded in part by the $3B USDA Partnership for Climate Smart Commodities.
Our friends from Australian spoke on their success with industry wide Better Manufacturing Practices to protect the Great Barrier Reef and to improve yields.
And Bonsucro gave evidence of how their Production Standard has improved environmental and social metrics in the cane sugar sector world-wide, including a GHG mitigation pathway.
6. Buy Early and Often
With very little economic data pointing to lower inflation, lower demand, lower labor, lower transportation costs, or lower interest rates, the rational buyer will have little choice but to book sugar early to avoid potential price increases and potential supply issues later in the year.
7. A Solution: Changing Sugar Specifications
With limited options to help our customers lower their sugar costs, Sugaright continues to offer the option of higher color liquid sucrose as an alternative to highly refined white sugar. We met with many new potential customers who heard the story of how We Changed the Way You Think About Sugar. All problems deserve a solution.
