World Sugar Prices Research Articles

How does the financial performance of sugar-using firms compare to other agribusinesses? An accounting and economic profit rates analysis

PurposeThe United States (US) sugar program protects domestic sugar farmers from unrestricted imports of heavily-subsidized global sugar. Sugar-using firms (SUFs) criticize that program for causing US sugar prices to be higher than world sugar prices. This study examines the financial performance of publicly traded SUFs to determine if they are performing at an economic disadvantage in terms of accounting profitability, risk and economic profitability compared to other industries.Design/methodology/approachFirm-level financial accounting and market data from 2010 to 2019 were utilized to construct financial metrics for publicly traded SUFs, agribusinesses and general US firms. These financial metrics were analyzed to determine how SUFs compare to their agribusiness peer group and general US companies. The comprehensive financial analysis in this study covers: (1) accounting profit rates, (2) drivers of profitability, (3) economic profit rates, (4) trend analysis and (5) peer comparisons. Quantile regression analysis and Wilcoxon–Mann–Whitney statistics are employed for statistical comparisons.FindingsRegarding various profitability and risk measures, SUFs outperform their agribusiness peers and the general benchmark of all US firms in terms of accounting profit rates, risk levels and economic profit rates. Furthermore, compared to other US industries using the 17 French and Fama classifications, SUFs have the highest return on investment and economic profit rate―measured by the Economic Value Added® margin―and the second-lowest opportunity cost of capital, measured by the weighted average cost of capital.Originality/valueThis study finds nothing to suggest that the US sugar program hinders the financial success of SUFs, contrary to recent claims by sugar-using firms. Notably in this analysis is the evaluation of economic profit rates and a series of robustness techniques.

The impact of US sugar prices on the financial performance of US sugar-using firms

The effect of the United States (US) sugar program on sugar-using firm profitability from 2000 to 2017 is examined using firm financial data and the relative US-to-world sugar price ratio. Return on assets and market-to-book ratio proxy for firm financial performance. The regression results provide statistical evidence that as the US sugar price increases relative to the world sugar price, sugar-using firm financial performance improves. This is likely a result of sugar-using firms passing higher sugar costs on to consumers. An ex post analysis indicates that the statistical tests have adequate power. Findings provide guidelines for future analyses investigating the relationship between the US sugar program and sugar-using firm financial performance.

Forecasting International Sugar Prices: A Bayesian Model Average Analysis

This paper examines the relative importance of key variables for the prediction of international sugar prices. Understanding movements in world sugar prices helps policy-makers and participants in the sugar value chain to formulate effective investment strategies and forecast the effects of market shocks more accurately. We combine a Bayesian model averaging (BMA) technique to address specification uncertainty with an out-of-sample analysis to evaluate price predictability. Results show that world sugar quotations are mostly influenced by their own dynamics, changes in international staple food prices, sugar production costs, and macroeconomic variables. The predictability of the BMA is found to be generally high, compared with a sample of benchmark time series approaches.

Does Brazil Ethanol Price Affect Brazil Sugar Export? An Indonesians’ Perspective

The research is financed by The Brawijaya University Abstract Besides the biggest ethanol producer, Brazil has been known as the largest sugar producer and exporter. Different from the USA, ethanol from Brazil is made from sugarcane. The sugarcane can also be processed into sugar. Still, ethanol and sugar are not meant to substitute each other, although both are the product of sugarcane. But the apprehension may appear as one of those could be lack of stock. This ultimately leads to an increased price. An increase in sugar price is worthy for Indonesia, the largest sugar importer. The above situation urges a study to find out how far ethanol could alarm sugar export at Brazil as the primary producer for both. The result reveals that ethanol price does not affect Brazil sugar export and even the world sugar price. Brazil sugar export is noninterventionist from that situation. Factors influencing Brazil sugar exports are the country’s sugar production and domestic sugar demand. Despite this, world sugar price is affected by world sugar import, whereas world sugar export does not interrupt world sugar price. Keywords: world sugar price, ethanol price, Brazil, world sugar export and import. DOI : 10.7176/EJBM/11-25-09 Publication date :September 30 th 2019

The Interrelationship Between Sugar Prices at the Main World Sugar Commodities Markets

This paper focuses on the topic of the interrelationship between global sugar prices. This relationship is examined using multivariate time series analysis. The analysis is based on the data set containing daily prices of sugar on the core world sugar markets in the period August 2012–August 2017. The multivariate time series analysis was employed to detect and examine the short-run as well as the long-run interrelationship between the world sugar markets. For this purpose, the vector error correction model was employed as the most suitable tool for further examination. The analysis has shown the non-stationary characteristics of individual sugar prices. Moreover, the common trend of the analyzed time series has been detected by utilizing co-integration analysis. A close relationship has been revealed in a limited number of markets. The price of sugar on individual markets is lagged one period and common trend expressed mainly by world sugar price.

The Development of World Sugar Prices

The globalization of the world economy is a phenomenon that has historical roots that began in the early 1970s, when the Bretton Woods and the Smithsonian agreements were created. This resulted in freely floating exchange rates and the gradual deregulation of financial markets. In addition, this increased market accessibility for individual and institutional speculators. By increasing market price fundamentals, the price volatility of numerous commodities (including agricultural commodities) has increasingly grown in specific sectors of the financial markets. This is particularly true in agricultural commodity markets. This change has become a possible financial incentive for speculators. Due to the high degree of distortion and government protection, the sugar market has resisted this speculation for quite some time. However, in the context of the recent financial crisis of 2008 and 2009, this market segment could not escape the “incursions” of speculative capital. Sugar prices have “surged” upwards significantly. This is not only due to speculators, but it also due to the growing demand for biofuels. Sugar prices during the period of 2000 to 2016 saw unprecedented price fluctuations. The world sugar price has risen from about 11 cents (in early 2000) to more than 65 cents per pound of raw sugar (2010/2011). Speculative funds (hedge funds), which in recent years have made transactions on average of about twenty million tons of sugar a year, played a major role in this fluctuation. However, their impact on the price of sugar does not lie in the fact that these funds are pushing for a rise or a fall in the price of sugar, but their effect is that these funds cause in particular, price fluctuations in sugar because they attempt to profit on this fluctuation in prices. The impact of speculation on falling or rising prices is significant. In the above period, the number of “price fluctuations” has almost doubled in comparison with the previous period.

The Rents from Trade and Coercive Institutions: Removing the Sugar Coating

The 19th century collapse of world sugar prices should have depressed wages in the British West Indies sugar colonies. It did not. We explain this by showing how lower prices weakened the power of the white planter elite and thus led to an easing of the coercive institutions that depressed wages e.g., institutions that kept land out of the hands of peasants. Using unique data for 14 British West Indies sugar colonies from 1838 to 1913, we examine the impact of the collapse of sugar prices on wages and in- carceration rates. We find that in colonies that were poorly suited for sugar cane cul- tivation (an exogenous colony characteristic), the planter elite declined in power and the institutions they created and supported became less coercive. As a result, wages rose by 20% and incarceration rates per capita were cut in half. In contrast, in colonies that were highly suited for sugar cane there was little change in the power of the planter elite — as a result, institutions did not change, the market-based mechanisms of standard trade theory were salient, and wages fell by 24%. In short, movements in the terms of trade induced changes in coercive institutions, changes that are central for understanding how the terms of trade affects wages.

Factors Involved in the Process Cane into Sugar in Indonesia

The Indonesian sugar economy is quite worrying due to the increasing of imported sugar from year by year. Therefore it is necessary to study, what factors are involved in the Indonesian sugar economy and how far these factors play a role in the arena of sugar economy.This study is based on secondary data from the years 1983-2013, from several sources such as BPS, AGI, USDA, and the World Bank. Then the data is poured into models are made in such a way that are similar to the actual conditions, according to the theory of agricultural economics. SAS version 9 is utilized to process the data, with technique of simultaneous link.The result says, factors affecting cane field is the price of sugar (Pg), while the price of paddy (Pa), Price of corn (Pj), and lending interest rate (ir) are not significant. Whilst, factors affect cane productivity are the price of sugar (Pg), lending interest rate (ir), and price of Urea (PfUrea). Factors that influence sucrose-content rate, those are time (t) and ratooning. Increasing the frequency of ratooning, the better the results of sucrose-content. Factors affecting domestic sugar demand are the price of sugar (Pg), population (Pop), income level (Ini), and the previous year's sugar demand (Dg1). In the marketplace, factors affecting Indonesian sugar import is the difference between sugar demand (Dg) and sugar production (Qg), time (t) and sugar imports in the previous year (Mg1). The factors that affect the price of sugar is the world sugar price (PWg), the Rupiah exchange rate against the USD(ERI), Nominal Rate of Protection (nrp), Cost of Sugar Cane Growers (HPP) and the price of sugar a year earlier(Pg1), while Indonesian sugar supply(Sg) is not significant.

The Impact of World Sugar Economy Toward Sugar Largest Exporters and Importers

The world sugar economy has changed a large amount within a less of century because of economic and politic situation in the country which may transform an exporter to be importer. However, there are several factors may influence the transformation and those are forecasted to see how far those affect the sugar exporters and importers. To comprehend world sugar economy in details, there is a need to make a research to see the impact of the situation of world sugar economy from the theory of agricultural economics’ perspective. Time series data of 1983-2013 has been utilized through econometric method and technique and it run through SAS version 9 tool.The result says, world sugar price is not affected by world sugar export, even sugar import may influence world sugar price. World sugar price also doesn’t affect to either world sugar export from sugar exporters and importer. In Brazil, world ethanol price is also not significant to influence its sugar export, even it seems sugar and ethanol compete each other. Variable of sugar production in each country supports its sugar export variable, especially for largest sugar exporters. However, sugar domestic demand thoroughly influences to the export of each country. Last year sugar export is correlated with current sugar export. Domestic sugar demand in EU doesn’t influence sugar import of EU, while in USA it does. The experience of sugar import in previous years do influence the current sugar import. Indonesia should be aware of continuity of sugar import.

The Impact of the U.S. Sugar Program Redux

We analyze the various welfare costs, transfers, trade, and employment consequences of the current U.S. sugar program for U.S. consumers, other sugar users, sugar refiners, cane and beet growing and processing industries, other associated agricultural sectors, and world markets. The removal of the sugar program would increase U.S. consumers' welfare by $2.9 to $3.5 billion each year and generate a modest job creation of 17,000 to 20,000 new jobs in food manufacturing and related industries. Imports of sugar containing products would fall dramatically, especially confectioneries substituting for domestic inputs under the sugar program. Sugar imports would rise substantially to 5–6 million short tons raw sugar equivalent. World sugar price increases would be minor, equivalent to about 1 cent per pound.

IMPACTS OF SUGAR IMPORT POLICY ON SUGAR PRODUCTION IN INDONESIA

Production of sugar unful lled consumption of Indonesia society. The lack of consumption and productionhave ful lled by import. Assumption national consumption 2,7 million ton, Indonesia will import sugar in 2013predicted about 300.000 ton (Tempo.co, August, 21, 2012).The aims in general of this research are to understand the impact of sugar import policy on sugar production.Especially (1) to understand the factors that in uence sugar import price, (2) to understand impact of sugarimport price on sugar domestic price and (3) to understand the impact of sugar domestic price on sugarproduction.Model analysis of this research is Simultaneous Error Correction Model. This model can estimate the structuralparameter exactly (unbiased parameter) (Gujarati, 2010). Policy made on this research can be responsibly.The results of this research are shown that price of sugar import in uenced by world sugar price and thequantity of sugar imported and tariff is not. Price of domestic sugar in uenced imported sugar price. Anddomestic sugar price has in uence the sugar production.Import policy in sugar to ful ll lack of consumption and production will make decreased sugar domestic price.The decrease of sugar domestic price will impact on decrease of sugar production. That policy have dilemmaon consumption and production.Keywords: sugar imported, price of sugar imported, sugar domestic price, sugar production and policy dilemma.

The Challenges of Sugar Market: An Assessment from the Price Volatility Perspective and its Implications for Romania

Recently, the concerns regarding food and energy security, the threats brought by the global warming phenomenon, combined with the challenges that the commodity markets have faced since the beginning of the new millennium, have placed agricultural markets in the center of attention in both academic and policy spheres. In this revitalized awareness, a particular and fundamental role is played by sugar. The sugar market is far from being a peaceful and conventional one, bringing more challenges and unrest on its own. An unusual mixture of free and protected markets, special trade agreements and outstandingly volatile prices differentiate the trade of this product from other agricultural commodities. Historically, sugar has been one of the most volatile agricultural commodities, constituting a real challenge both for market participants and for policymakers to deal with its instability. In addition, with regard to domestic markets, sugar prices can differ substantially from country to country, generally registering higher levels than the world sugar prices. The Romanian economy manifests an increased responsiveness to external shocks, as a consequence of the processes it is traversing in the recent decades. The sugar market is consequently affected by the external instability while also facing other internal problems and challenges. The purpose of this paper is to analyze the particularities of the sugar market and their implications, by describing, modeling and analyzing the recent sugar price volatility on the Romanian market in comparison to the international one. After establishing the corresponding econometric models the paper compares the estimated conditional variance on the two markets, emphasizing the situation of the Romanian market and commenting on its implications.

High world sugar prices: is Asia’s production cycle to blame?

The current high world sugar prices reflect a major imbalance between global supply and demand, which has reduced stocks to very low levels. Although it remains to be seen whether prices will rise much above current values, it is clear that the supply chain will remain stretched throughout 2010 and this will help to maintain prices at a high level.

Sugar Prices, Labor Income, and Poverty in Brazil

This paper assesses the impact that a potential liberalization of sugar regimes in OECD countries could have on household labor income and poverty in Brazil. The authors first estimate the extent of price transmission from world markets to 11 Brazilian states to capture the fact that some local markets may be relatively more isolated from changes in world prices. They then simultaneously estimate the impact that changes in domestic sugar prices have on regional wages and employment depending on worker characteristics. Finally, they measure the impact on household income of a 10 percent increase in world sugar prices. Results suggest that workers in the sugar sector and in sugar-producing regions have better employment opportunities and experience larger wage increases. More interestingly, households at the top of the income distribution experience larger income gains due to higher wages, whereas households at the bottom of the distribution experience larger income gains due to movements out of unemployment.

A methodology to support decision-making on sugar distribution for export channel: A case study of Thai sugar industry

Supply chain research can lead to an increase in efficiency, business integration, responsiveness and ultimately market competitiveness. In the sugar industry, such research has expanded rapidly over the past two decades, and has been motivated by low world sugar prices and rising costs of production. However, in the present competitive business environment, a more customer-driven and holistic approach to supply chain management is required. This study focuses on warehouse and distribution management for the export channel of Thai sugar industry. The aim is to suggest the best inventory position and transportation route in the distribution system based on Genetic Algorithm (GA). It provides a systematic and flexible framework to solve the problem of cost minimization of sugar transport from the mills to seaports. The results demonstrate that the tool is not only useful for minimizing the cost, but also for managing sugar warehousing, distribution route and seaport exporting. While the focus of this paper is on sugar supply chain, much of the information is relevant to distribution management of other agricultural commodities as well.

Effects of market liberalization on income from sugarcane farming in Guangxi, China

The economic reforms characterized by trade liberalization, market opening, change of land tenure system, etc. have had significant impacts on the agricultural sector in China. In order to examine the effects of market liberalization on farmer income in relative poor regions, a case study of sugarcane farming in Guangxi province has been conducted. The study shows that the effects of liberalization of international trade, as well as domestic output and input markets, etc. on farmer’s household income are considerable. After liberalization of international trade on sugar and sugarcane in 1995, the domestic sugar price responses to the world sugar price more significantly than before the liberalization. The elasticity of domestic sugar price to world sugar price is 0.52. The liberalization of domestic market also had significant effects on the sugarcane production and producer price. The local sugarcane price did not respond to domestic sugar price significantly before the liberalization, but it does respond to the domestic sugar price significantly after the liberalization. The liberalization in input markets leads to dramatical increase in input prices particularly in short run, and increase the total cost of sugarcane farming. As a result, the household incomes from sugarcane fanning are affected significantly. Simulation study shows that sugarcane farming in Guangxi would be affected more greatly after China’s WTO accession, and it will affect the rural household income eventually.

THE COST OF THE U.S. SUGAR PROGRAM REVISITED

The article analyzes the welfare cost of the U.S. sugar program using a multimarket model of U.S. sweetener markets. The latter includes raw crops, sugar extraction and refining, and sweetener users (food‐processing industries and final consumers). The authors address the industrial organization of food industries using sweeteners and treat the United States as a large importer. With the removal of the program, this article estimates (all figures in 1999 dollars) that in 1998 cane growers, sugar beet growers, and processors would have lost $307, $650, and $89 million, respectively; sweetener users would have gained $1.9 billion. World prices would have increased by 13.2%. The deadweight loss of the program is estimated at $532 million.

Impact of macro-economic policies on the sugar sector of Sri Lanka

An analysis was carried out to study the effect of changes in domestic prices of sugar, sugar import, tariff rates, interest rates and exchange rates together with mill capacities, per capita incomes and world sugar prices during the post-liberalisation period on the sugar sector of Sri Lanka to suggest policy guidelines for its development. The analysis was based on a simulation model which consisted of relationships of sugarcane area, cane and sugar production and imports, consumption and price of sugar determined using data from 1978 to 1999. The results indicated that domestic price of sugar was the most important economic variable in determining sugarcane area and hence cane and sugar production, and sugar consumption. Price of sugar had a positive relationship with cane area and an inverse relationship with sugar consumption. The domestic price was mainly determined by the world price which was highly volatile. Thus need for a rational pricing policy on sugar to benefit both sugar companies and consumers was emphasized. A sugar pricing policy based on an efficiency price and a mechanism to insulate the effects of fluctuations of world price on the local price to offer a stable price to both sugar companies and consumers together with offering an incentive for improving sugarcane processing efficiencies and a component for ensuring a revenue for government was suggested.

Impacts of trade liberalizations under the Uruguay round on the world sugar market

The impacts of the Uruguay Round policy provisions on the world sugar market show that these policies will stabilize the world sugar price at slightly higher levels than in the baseline. Global sugar consumption will increase as a result of the income growth caused by the Uruguay Round. Economic resources will be allocated more efficiently among the sugar industries of the various countries. However, the impacts on the sugar industries in countries with strong producer supports will be rather small because the negotiation process of the Uruguay Round has accommodated the changes in sugar policies already implemented by individual countries in the past few years. Low-cost sugar producing countries will benefit from the higher world sugar price, and consumers in countries with protected markets will benefit from lower domestic prices.

Impacts of trade liberalizations under the Uruguay Round on the world sugar market

AbstractThe impacts of the Uruguay Round policy provisions on the world sugar market show that these policies will stabilize the world sugar price at slightly higher levels than in the baseline. Global sugar consumption will increase as a result of the income growth caused by the Uruguay Round. Economic resources will be allocated more efficiently among the sugar industries of the various countries. However, the impacts on the sugar industries in countries with strong producer supports will be rather small because the negotiation process of the Uruguay Round has accommodated the changes in sugar policies already implemented by individual countries in the past few years. Low‐cost sugar producing countries will benefit from the higher world sugar price, and consumers in countries with protected markets will benefit from lower domestic prices.