Sugar prices hit the sweet spot
THE sugar price this week was stronger than in half a decade due to world shortages, and analysts believe prices could go higher.
In New York, the futures contract for May 16 edged up to 16.58US¢ a lb on Tuesday night.
Tom McNeill of Greenpool, on ABC radio on Tuesday, referred to stronger valuations for Thai sugar which he thinks will ripple through to Australian sugar valuations as well during the year.
“Not only are the futures valuations rising (unfortunately we’re also seeing the Aussie dollar going higher at the same time) – we’re also seeing physical values being paid at higher levels,” he said.
“In Thailand last week there was a quoted tender for July/September and the buyers paid 1.37¢ per lb over and above the futures valuations, so that’s very strong valuations given the weak state of the market over the last while has seen weak valuations, much, much lower than that. So we’re seeing a nice coincidence of strong futures and strong physical premiums as well in the marketplace.
“The high dollar has also seen growth in ethanol exports to South Korea and inquiry from the Philippines, largely as a result of terminal gate prices in Australia which have fallen quite sharply in conjunction with lower oil prices over the past year and in particular in the past six months, and ethanol prices in US dollars maintaining reasonable values.”
Rabobank regional manager Trent McIndoe said prices were again recovering after a small dip during February.
“We’ve seen prices more volatile early this year, however with tightening fundamentals hopefully prices will be supported throughout 2016,” he said.
Thai and Indian crops continue to suffer as El Niño threatens to derail their respective crops. With the beginning of the Brazilian crush in the not too distant future, fundamentalists will begin to monitor weather patterns as these could become the key factors in the near future.