KANSAS CITY — Global commodities trader and market analyst C. Czarnikow Sugar, Inc. said global sugar consumption could drop by 2 million tonnes or more because of the coronavirus (COVID-19).

Czarnikow analyst Ben Seed, in a note to clients, forecast a 2-million-tonne decline in 2019-20 global sugar consumption, leaving total consumption flat with 2018-19, compared with its prior forecast of a 1% increase from 2018-19. Global sugar consumption will decline on a per capita basis in 2020, Mr. Seed said.

“This is due to the collapse of out-of-home food and drink consumption, and the difficulties faced in operating normal supply chains,” Czarnikow said, noting that it disagreed with some forecasts that increased consumer buying of certain food items would at least offset reduced sales at restaurants and institutions.

The decline will be the result of lower overall sugar use in countries that have implemented lockdowns, including 5% declines in consumption in China, South Korea, Italy, Germany, France, Poland, Spain, The Netherlands, Austria and Lebanon, where significant isolation steps have been taken. Further country-specific and global reductions in sugar consumption are possible as other countries increase isolation measures, Czarnikow said.

At the same time, the decline in global sugar consumption comes at an opportune time because of tight global sugar supplies, including in the United States. Czarnikow still expects a 10.2-million-tonne global sugar deficit this year due to lower production in several key countries.

The change from out-of-home consumption to more in-home demand has emptied grocery shelves of sugar in the United States and some other countries as consumers stock up sugar and other staples.

US sugar processors and refiners contacted by Milling & Baking News said retail business has been brisk.

“Demand has been extremely strong in the last two weeks and we expect order processing to be quite heavy for the next (several) weeks,” said Pedro Figueroa, vice president of sales and marketing at the Michigan Sugar Company.

Like many or most other companies, Michigan Sugar’s sales, customer service and transportation staffs were working from home for their own safety and to prevent the further spread of COVID-19. Michigan Sugar staff were available 24/7 to meet customer needs, Mr. Figueroa said.

Overall sugar supplies in the United States already were tight because of sugar beet and sugar cane crop issues in 2019, and a drought-reduced crop in Mexico, by far the largest sugar exporter to the United States. Spot sugar prices currently are at seven-year highs. Domestic US beet and cane sugar production were down a combined 11% from 2018-19, while Mexico’s cane outturn is expected down 19%.

Some retailers buy sugar on annual contracts, but others buy monthly or quarterly. The shorter-term buyers will face the sharply higher prices, although one major cane refiner said grocers may not pass on to consumers the full amount of higher sugar prices, choosing to treat sugar as a “loss-leader” to pull customers into stores once the panic buying subsides.

Also challenging for sugar producers is adjusting packaging and logistics to meet the shift in demand from restaurants and institutions to the retail market. Most retail sugar is in 4-lb and 5-lb bags, while restaurants get sugar in 25-lb or 50-lb bags. Industrial users who buy sugar in bulk by rail cars or trucks should not see any change, other than dealing with tight supplies and increased imports, which also will require logistics adjustments.