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Global sugar prices are down around 19% this month while raw sugar has fallen 8% last week alone,"
according to an ET report.
We believe there is considerable downside risk to sugar prices, forecasting 22 cents/lb in 2012 and 19
cents/lb in 2013, i.e., 15-17% below forward curve," said the report.
the world's second-biggest producer after Brazil, could rise to 26.5 million tonnes in 2011/12, Jayantilal
B. Patel, president of the National Federation of Cooperative Sugar Factories Ltd (NFCSF), told an
industry meeting yesterday.
n 2010/11, with global prices tumbling on a world surplus of sugar, India is likely to have produced
around 24.2 million tonnes and has exported 1.5 million tonnes.
ET
ugar futures were up for a third day on Wednesday, climbing to a three-day high as lingering concerns
over sugar crops in Brazil and speculation of increased demand from China buoyed prices.
On the ICE Futures U.S. Exchange, sugar futures for October delivery traded at USD0.2505 a pound
during European morning trade, jumping 0.68%.
It earlier rose by as much as 1.4% to trade at USD0.2539 a pound, the highest price since September 23.
Concerns over Brazil’s sugar harvest continued to boost prices after ICAP do Brasil, the nation’s biggest
sugar industry group said last Friday that harvests from sugar-cane crops were expected to fall short of a
previous estimate, as adverse weather affected crops in recent weeks.
Brazil is the world’s largest sugar producer and exporter, with the U.S. Department of Agriculture
estimating the nation accounts for nearly 20% of global production and 39% of global sugar exports.
German lender Commerzbank said in a report Tuesday that it forecast sugar prices to average
USD0.2700 a pound in the fourth quarter of 2011, before dropping to USD0.2600 a pound in the
following quarter.
http://www.forexpros.com/news/commodities-news/sugar-futures-gain-on-brazil-crop-woes,-china-
demand-outlook-224566
EUThe bloc has already imported 280,495 metric tons of raw- sugar for refining, 3,761 tons of raw sugarnot for refining, 52,697 tons of white, or refined, sugar and 20 tons of other sugars at reduced duty
under the last four tenders, according to the commission.
http://www.businessweek.com/news/2011-09-28/eu-to-hold-last-tender-to-import-sugar-at-reduced-
duty-today.html
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http://www.profi-forex.us/news/entry4000001940.html
ugar market outlook
27 September 06:56 AM
Now, when the harvesting campaign is nearly over,
we can make certain conclusions about the global
production of sugar. In mid 2011 the global
production reached 165,7M tons, which is 5.8% more
than in mid 2010.
According to the Department of Commodity Trading, Masterforex-V Academy, preliminary forecasts
show that in 2011/2012 the production of sugar may exceed the consumption due to favorable prices. If
to take in to account that over the last 12 months sugar has gained in price 62% (according to the World
Bank), the current situation is not that bad.
The emerging economies are expected to produce 10% more sugar (128M tons) as compared to 2010.
On the other hand, the developed economies are expected to produce only 37.7M tons (a 45 decline).
In 2011/2012 the global consumption of sugar will grow by 1.5% up to 165M tons. The global
consumption per capita is expected to stay the same – 24kg a year per capita.
South America. Brazil is planning to produce 30.63M tons of sugar (in 2010 it produced 33.5M tons). It is
said that 45% of the sugarcane crop will be refined to make sugar. Columbia is the second major
manufacturer in South America. It is expected to make 2.5M tons of sugar. Mexico is also planning to
make more sugar in 2011/2012 due to this year’s record sugarcane crop. It will allow Mexico to boost
the export of sugar to the USA.
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Africa. The total amount of sugar produced in Africa will be roughly equal to 11M tons, which is a 2.5%
increase. It became possible to the expansion of cultivation areas and higher refining capacity. However,
the further development is hindered by poor infrastructure. South Africa is the continent’s leader in
terms of sugar production. It is expected to produce 2.4M tons of sugar. Egypt, Africa’s number 2, isexpanding the sown areas of sugar beet while leaving the sown areas of sugarcane unchanged.
Asia. It is expected to produce 60.7M tons of sugar, which is a stunning increase (+15.5%), mainly at the
expense of India and Thailand. India’s sown area of sugarcane is equal to 4.8M hectares (+15%).
In China the figures haven’t changed despite a 40% increase in the sown area of sug ar beet. The reason
is droughts. Therefore, China has become the world’s biggest sugar importer.
Pakistan will produce 3.6M tons of sugar (+8%).
Europe. The production of sugar in the next agricultural year (starts on Oct 1st
) may increase by 2.4M
tons to reach 17.4M tons (the highest value over the last 5 years). France, the EU’s number 1 in terms of
sugar production, is expected to produce 4.6M tons (against last year’s 3.99M tons). Germany will
increase its production from 3.39M tons up to 4.18M tons.
http://www.businessweek.com/news/2011-09-28/russia-s-sugar-
output-from-domestic-beets-climbs-70-union-says.html
Russia’s Sugar Output From Domestic Beets Climbs 70%, Union Says September 28, 2011, 3:17 AM EDT
More From Businessweek
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Ukraine May Export Up to 25 Million Tons of Grains This Year
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By Marina Sysoyeva
Sept. 28 (Bloomberg) -- Russia’s sugar output from domestically grown beets reached 1.12
million metric tons since harvesting and refining began in July, up 70 percent compared with ayear earlier, when the country produced 657,200 tons, the Sugar Producers Union said on itswebsite yesterday. Crops were damaged last year by the nation’s worst drought in a half century.
http://online.wsj.com/article/BT-CO-20110927-712186.html
La Nina Could Hurt 2012 South American Sugar, Coffee Output
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By Leslie Josephs
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--The current La Nina weather phenomenon could hurt coffee andsugar production next year in South America, the world's largest producer of the two crops, andpush up their prices globally.
La Nina, a cooling of the equatorial Pacific Ocean, brings dry weather to southern SouthAmerica and heavy rains to the northern Andean region.
Weather has been abnormally dry in top coffee grower Brazil's main production regions. Withoutthe timely rains that cause coffee trees to flower, a process that leaves the coffee fruit behind,output could be lower than expected. Rains generally hit in September but have been late thisyear. Early October is considered the limit for the rains' arrival before significant crop damagecan occur.
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"People are starting to get concerned," said Thiago Cazarini, owner of Varginha, Brazil-basedCazarini Trading Co.
Heavy rains are expected to hit Colombia, the world's biggest producer of mild washed arabicacoffee beans, a highland variety sought for its rich flavors, and could hurt the country's chances
of increasing production in 2012 after three weather-ravaged harvests. Torrential rain knocksfruit off coffee trees and can cause disease.
"We expect the rains to be 50% to 70% higher than normal in some coffee-growing regions,"said Maria Teresa Martinez, a meteorologist at Colombia's Hydrology, Meteorology andEnvironmental Studies Institute.
Mike Halpert, deputy director of the U.S. National Oceanic and Atmospheric Administration'sClimate Prediction Center, said it is too early to tell how long or how severe La Nina will be.
"At this time, we see it lasting until early 2012," he said.
This could push up global coffee prices.
"We believe coffee may be the best commodity to exploit a developing La Nina phenomenon,"said Deutsche Bank in a note Tuesday, adding: "We would only enter this trade closer to the endof the year on the assumption that risk aversion had moderated and that the La Nina phenomenonhad strengthened to more convincing levels."
Brazilian sugar production is also at risk of dry weather, since a lack of rainfall makes it moredifficult to plant new crop and lowers the quality of cane already in the ground.
"It slows the development of the cane," said Michael McDougall, a senior vice president atbrokerage Newedge. "If it stays dry, no matter how dry, you might have to replant."
-By Leslie Josephs, Dow Jones Newswires; 212-416-4055; [email protected]
http://www.insidefutures.com/article/321769/Sugar%20Futures%20set%20to%20Fall.html
Sugar Futures set to FallFriday, September 23, 2011
by Andy Waldock of Commodity & Derivative Advisors
The Sugar market is one of the most volatile commodity markets. Sugar has made four moves of plus or minus more than 50% since the beginning of 2010. Sugar touched .36 cents per poundthis February. This was the highest sugar futures have been since 1980 when they reached nearly.45 cents per pound. Currently, October sugar futures are around .28 cents. I believe the
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fundamental supply factors in this market are set to drive sugar down to a more normal valuationaround .16 cents.
Sugar prices have generally rallied this summer based on four primary factors. First of all, therehave been logistical issues in Brazil's harbors. Brazil is responsible for nearly half of the world's
sugar production. Brazil is also a major exporter of soybeans, cattle and other agricultural goods.In fact, agriculture is responsible for 20% of their labor force compared to less than 1% here inthe U.S. Major snafus in the harbor construction projects currently under way caused deliverytightness in the March sugar contract and contributed to the market's peak in February.
The second primary contributor to sugar's rally has been the refining spread. This is thedifference between the price at which raw sugar can be purchased and the refined sugar can besold. This spread advanced to more than $160 per ton which, attracted significant sugarpurchases for delivery to refiners. This is similar to the temporary conditions we discussed inFebruary of the crude oil crack spread that drove gas prices higher even as the price of crude oildeclined.
The competition for sugar delivery also made its way into the ethanol market. The sugar basedethanol production of Brazil and other countries is far more efficient than the corn based ethanolindustry in place here in the U.S. However, just like here in the U.S. food based ethanolproduction pits the forces of hunger and fuel against each other. Therefore, rising crop pricescoupled with rising fuel prices combine to tax individual households and define the upperboundaries consumer demand.
The final push in upward sugar prices is more persistent. The growth in the economic viability of developing third world countries has led to increased sugar consumption. Better food and a morevaried diet are typically the first splurges for a rising standard of living. The growth of
purchasing power overseas will continue to fuel this trend and will place a higher floor on sugarfutures prices in the years to come.
World sugar production is always volatile. Over the last 20 years, the annual surplus or deficitbetween sugar consumption and demand has been split nearly 50/50 on an annual basis. Thisyear it looks like there will be a significant sugar production surplus. Reports from Thailand,India, Brazil, Europe and Russia look very favorably towards large harvests. The shipping issuesin Brazil have been figured out and they are also reviewing the possibility of cutting back ethanolsubsidies. Furthermore, the market inefficiency of the refining spread has been fully exploitedand is now back to normal levels. Thus, the supply side of the sugar market looks bountiful.
Technically, the remaining long positions appear to be held by small traders and CommodityIndex Traders while commercial traders are actively selling their forward production at theseprices. This leaves the market susceptible to a sell off as CIT's and small speculators will exittheir long positions as the market turns negative. Finally, I expect the market to ultimately test itsfundamental uptrend around .16 cents. This represents a value target in line with the globalpopulation growth and consumption patterns.Hover
