The largest grower of sugar is Brazil. While the biggest consumer of sugar is India. However, India is also the second biggest producer, while the European Union is in third place.
Due to India’s large population, most of the sugar commodity is consumed domestically, while the European Union exports a large portion of their own produce.
News and events in these countries will have a strong impact on the sugar price. In particular for Brazil it is the weather, while for India government statements will have an impact on the commodity price internationally.
Health Hazards and Government Regulation
There are numerous health impacts from sugar, such as diabetes, obesity and tooth decay. Many governments in the West have recently been introducing regulations to account for the negative health externalities that it causes.
The European Union
The European Union is the second largest exporter of sugar in the world. Any changes in the export policy will have an impact on the price of the commodity. The quota for sugar production is set to be lifted at the end of 2017.
The United States of America
The US has strong protectionist policies against the foreign imports of sugar. This has lead to high prices. The consumers have switched to using corn syrup as a substitute to reduce costs. There are calls for the government to lift the protectionist policies but this is unlikely with President Trump in charge.
Over the last few years the sugar price has been high due to bad weather, low supply and increasing consumption. However, the commodity is heavily protected and subsidised internationally. The base price of sugar is unknown because of all the government subsidies. In the free market scenario the commodity price would fall. All the information which IG exclusively provides for its traders about exports and consumption data should be followed as indicators of the price movement.
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