Despite its bad health-wise reputation, sugar has been a part of the human diet since ancient times. In its refined form however, it is a much more recent addition.

It is the most popular food ingredient in the US. An average American consumes some 150 pounds of sugar every year.

In such quantities, it is obviously not conducive to good health, as it promotes a series of processes in the body that lead to inflammation. Sugar’s negative effects have prompted some doctors to bill it “White Death”.

Refined sugar was not always as abundant as it is today. At one point it was so rare and expensive that it was known as “White Gold”.

What exactly is sugar?

Sugar is defined as a water-soluble carbohydrate, the taste of which is sweet. There are several types of sugars. Some examples of simple sugars are: fructose, glucose, galactose.

In its most commonly known, granulated form, sugar is called sucrose. Once in the digestive system, it quickly turns into fructose and glucose.

Calling sugar “nature’s fuel” would not be far-fetched at all. It is in fact found in most plants. In some of them however, it is more concentrated than in others. Sugarcane and sugar beet are two such plants. The world’s entire sugar production is based off them.

Sugar production

Some 80% of the world’s sugar comes from sugarcane. Sugar beet is responsible for the other 20%. While sugarcane can only be cultivated in tropical areas, sugar beet offers temperate climate countries the chance to set up their own sugar production.

The top sugar producer of the world – quite unsurprisingly – is Brazil. It is followed by India and China.

What drives the price of sugar?

Despite the health concerns linked to it, sugar is a hot commodity world-over. The factors that drive its  price are:

– consumption outlook. Obviously, this factor has to be considered on a global level. Over the last few decades, the sugar demand of the world has been rising steadily. Although in recent years, this trend has slowed down somewhat, more demand is expected to come from developing countries.

– sugar inventories also need to be factored into the equation. The more plentiful such stocks are compared to demand, the lower the price of sugar will go.

– given that we’re talking about an agricultural commodity, the caprices of the weather need to be considered as well. Current conditions and future weather outlook directly impact current and expected stock levels.

– government regulation also tips the balance one way or the other price-wise. In some countries, laws have been passed to limit sugar consumption. Such regulatory environments are conducive to reduced sugar demand. This way, they directly impact prices.

– US inflation. Interestingly, sugar prices are correlated with US inflation rates. Commodity prices tend to fall when the US dollar gains strength. Given that the US is the world’s top sugar consumer and importer, weak inflation there has a massive negative impact on sugar prices.

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