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The impacts of increases to the price of sugar on supply chains and the wider economy

In 2026, the Thai sugar industry is projected to expand, supported by increased production due to the onset of the La Niña phenomenon

Krungsri Research projects conditions for the Thai sugar industry would improve in 2021-2023 along with the recovery of the overall economy, stronger demand from downstream industrial consumers, especially the food and beverage industry. There are also expectations of better climate, which would boost sugarcane output and sugar production. However, the industry is facing several challenges, including high sugar inventory worldwide and the effect on global sugar prices, imposition of sugar tax in many countries, rising awareness of personal health globally, and lingering uncertainty over government regulations for the industry, especially the reform of the Sugarcane & Sugar Act and its potential impact on operators’ margins and earnings.

Over the period 2018-2020, the supply of sugar to world markets will tend to lead to an increase in stocks and this will prevent significant price rises

Krungsri Research sees the Thai sugar industry contracting through 2024. Although the domestic market receives the positive impacts of recovery in the tourism sector and an improving outlook for the restaurant business, the contracted exports due to the effects of drought on agricultural outputs offset those positive impacts. However, the situation will improve over 2025 and 2026 thanks to the emergence of La Niña conditions and thus of a more favorable climate; the high price of sugar and the incentive effects of this on supply growth;

Over 2023 to 2025, strengthening economic conditions both at home and in export markets will help improve the outlook for the Thai sugar industry, especially in 2024 and 2025. Consumption will be lifted by the recovery in the tourism sector, which will add to demand from downstream industries like food and beverage manufacturers. On the other side, output will benefit from improved sugarcane outputs, thanks to the favorable climatic conditions and the positive effect of price guarantees on the total area of sugarcane under cultivation.

Updated the key Industry Indicator: Sugar in each industry.By Chaiwat Sowcharoensuk

Updated the key Industry Indicator: Sugar in each industry.By Chaiwat Sowcharoensuk

sugar is a sweetener from plants. With high demand around the world, both for direct consumption and as a flavoring agent in various industries