World Sugar. If surveyed most U.S. citizens would probably say that sugar comes from Hawaii, isn’t that what it says on the bag? Though some sugar is. In this article, we will discuss how and where sugar is produced and how the market can be affected.
First how and where is sugar grown?
There are two types of raw sugar; sugarcane and sugar beets.
- Sugarcane is like bamboo in nature, long and stalky. At maturity which takes 12-15 months, the cane can reach 20 feet tall. Sugarcane is grown from cuttings of mature stalks instead of seeds and can be harvested 4 or more times per crop year.
- Sugar beets are tubular in shape and have a large white root that grows to 12 inches and at maturity weighs about 2 pounds. Beets are planted in the spring and harvested just before the first freeze in the fall. Though the two forms of raw sugar are very different, once they go through the refining process they are indistinguishable.
Sugar is produced in many different areas and countries. Sugarcane prefers to grow in tropical areas of the world with the leading producers being Brazil, India, and Cuba.
Most sugar beets come from the European Union, China, Thailand, and Australia.
The U.S. is the only country that produces both sugarcane and sugar beets which are mostly grown in Hawaii, Louisiana, Florida, California, and Minnesota. The U.S. provides about 10% of our world sugar mostly in cane form.
What is World Sugar #11?
The sugar remaining after domestic consumption is called World Sugar #11. This is sold in a free market under special agreements and is regulated by the International Sugar Organization. The number 11 refers to the grade of sugar that is traded. Other grades can be used at a premium or discount at delivery.
What can move the market?
Supply: The supply of sugar is based mainly on how the crops yield each year. Sugar crops are susceptible to the typical pests and weather that other crops are. It can also be affected by other grades being accepted for #11 sugar. In 1995 the market declined heavily due to Brazilian sugar of a lower grade being accepted into the market. Other declines in the past couple of years are from overproduction mostly from Brazil.
Demand: Sugar is still a luxury, not a necessity. If income levels decline there is a lower demand for sugar. It can also be affected by political changes, import and export demands, and current exchange rates.
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