Thailand, the world's second-largest white sugar exporter, is grappling with significant challenges as global sugar prices hit a three-year low. The country's vast sugar industry, which spans over 1.6 million hectares and produced 11 million tonnes of sugar in 2023, finds itself at a crossroads due to a series of global and domestic pressures.
The global sugar market, primarily influenced by pricing on the New York exchange, has seen white sugar prices plummet to around US$470 per metric ton—the lowest since September 2021. This decline has placed immense pressure on Thailand's sugar industry, with the factory gate price of Thai sugar standing at approximately 20 baht (58 US cents) per kilogram. Despite being the third-largest raw sugar exporter globally, Thailand faces stiff competition from India and Brazil, the first and third-largest exporters of white and raw sugar, respectively.
Approximately 70% of Thailand's sugar exports are shipped overseas. However, the recent collapse in global sugar prices poses a significant threat to this export-driven sector. Compounding these issues is China's decision to ban imports of Thai sugar syrup, further straining the market. The outlook remains bleak, with global prices expected to stay low throughout 2023.
The climate crisis also poses a considerable challenge to Thailand's sugar industry. Changing weather patterns and extreme conditions have impacted sugar production yields, creating uncertainty for farmers and exporters alike. These environmental factors add another layer of complexity to an already turbulent market landscape.
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