After coffee, it was sugar’s turn to register a significant price increase. According to Bloomberg, the price of sugar is soaring as fires and drought hit crops in top producer Brazil, putting sweets and desserts at risk of higher costs.

Raw sugar futures on course for biggest weekly gain in 16 years as traders digest the extent of crop damage from the fires and the heat wave that hit the country.

The state of São Paulo faced a record number of fires last August due to the lack of moisture. So, sugarcane roots were destroyedwhich may force producers to replant, while they are likely to face a smaller harvest. In addition, there has been a long dry spell since last October, which has limited yields.

Although changes in farm produce prices usually take some time to trickle down to supermarkets, the latest increase puts the price of sugar on track for the sixth straight annual increase, which puts pressure on food producers.

Wilmar International Ltd. (trader), lowered its estimates for sugar production in south-central Brazil, citing a series of “unusual and persistent weather phenomena”. Wilmar said in a post on X that last month’s fires affected up to 450,000 hectares (1.1 million acres) of sugar cane.

Mills in Brazil are expected to stop processing sugar cane from the end of October, he estimates Rabobank analyst Andy Duff. Low production will likely force them to stop earlier in the season, he says.

“There is the prospect of a decline in global sugar availability for export in the first quarter of 2025” according to Duff.

On the way to coffee and cocoa

The jump in sugar prices coincides with the significant rise of other crops, such as coffee and cocoa, charging especially for drinks and desserts. The weather-fueled price hikes come at a time when consumer goods companies are already facing challenges as they try to persuade consumers to return to premium brands after a period of high inflation and declining consumption .

The difficult environment has caused and leadership changes in the food industry. Nestle chief executive Mark Schneider abruptly left the Swiss maker of KitKat and Nescafé last month. Also, very recently, Starbucks Corp CEO Laxman Narasimhan lost his job less than two years into the job.

The biggest rise since June 2008

The most active raw sugar futures rose 3.8% in New York on Friday, shaping the weekly rise to 16%the largest since June 2008.

The rain is expected to persist in Brazil for the next ten days “although light rains are considered possible on Friday and Saturday in the southern part of central-southern Brazil,” according to the weather forecast.

“Improving weather in October is ‘unlikely to benefit current crops, may benefit future ones'” Wilmar stated.