Molasses Struggle Against More Competitive Alternatives

Insight Focus

  • Alternative feed commodities become more competitive.
  • Higher tanker freight could lift molasses prices.
  • Russian beet molasses cannot easily be shipped or replaced by other origins.


The global molasses market is facing some important challenges in the next few months.

Competing feed commodities have recently fallen from their peaks and are generally looking more competitive, especially with the recently announced Ukraine export agreement. In contrast molasses prices have not fallen. Feed demand for molasses represents approximately 65% of total global imported molasses demand.

Along with the increased competitiveness of alternative feed commodities, molasses is facing a logistics challenge in terms of buoyant tanker freight rates. In recent months we have experienced a relentless rise in tanker freights rates across the globe and in all of our trade lanes. The increase in tanker rates has been substantial; with rates increasing by over 100% in a few months on some routes. Tanker freight is typically unhedged and will be passed onto to consumers in terms of higher molasses prices. This is particularly poor timing to face an increase in molasses prices during a period of relative softening of other commodity prices (although molasses prices did not reach similar peaks that other commodities did during the first half of 2022).

The global beet molasses market is contouring to face a challenge in terms of supply as Russian origin molasses cannot easily be exported from the Black Sea and Sea of Asov (in common with other commodities). Before the 24th February 2022, Russia would be expected to supply approximately 30% of globally exported beet molasses. The supply is expected to remain extremely low for the short-to-medium term from Russia. Despite the new European and US sugar beet crop harvests beginning in September, the supply situation will not improve as Russian supply cannot be easily replaced by alternative origins.

It is clear the global molasses market is going to be challenged by lower soft commodity prices, increased logistics costs and continuing tightness in beet molasses supply. The next few months will very important in determining the demand of beet and cane molasses in the global market and we could see a fall in demand if these headwinds endure.