• leaders in sugar trade around 10 million tonnes per year¹⁾

First, the sheer size of the market. World sugar production is more than 180 million mt compared to 5 million mt for cocoa beans. It's on a different scale.

Not really. Sand and sugar look almost identical. So, many years ago, some gangs replaced sugar with sand on the trucks going from the mills to the ports. Fortunately, our people are trained to identify visually or do quick tests to see if there is fraud in the cargo. It is one of the reasons why Bureau Veritas is continuously investing in our teams' technical development and qualification.

sugar is complex because it is a FOB contract, unlike coffee or cocoa²⁾

Brazil, the Middle East, Thailand, China, etc.³⁾

We’re trying to forecast crops, and I’m unsure how big data helps. You’ve got to get your feet dirty, get out on the ground, and try to understand acreage. That’s where errors can occur. You don’t notice the switches from one crop to another if you’re not on the ground. Fundamental analysts have a critical role and will, hopefully, survive!¹⁾

They are not spending enough time understanding consumption. It’s easier to follow crop numbers. Consumption involves a detailed analysis of monthly stocks, imports, and exports. It’s hard work. The other problem is that people consume white sugar, not raw sugar; monitoring white sugar trade flows is more complicated than monitoring raw sugar trade flows. The key to success is to get to grips with the white sugar balance sheet, which flows back into a raw sugar balance sheet. It’s been a massive issue for the last seven or eight years, with consumption falling in the developed world.²⁾

The challenge with consumption data is that an error can multiply through your balance sheet. A considerable demand shock, like COVID-19, can impact the quality of your consumption analysis. Consumption sets a good analyst apart from a bad analyst. The trade house analysts are often the best as they see the white sugar flows.³⁾