Raw su­gar deficit a boost for pro­duc­ers

Port Douglas & Mossman Gazette - - BUSINESS -

THE fun­da­men­tal shift in raw su­gar mar­ket sen­ti­ment has con­tin­ued in re­cent ses­sions, with a sta­tis­ti­cal global raw su­gar deficit of be­tween 10 and 15 mil­lion tonnes over the 2015-17 sea­sons fi­nally giv­ing Aussie su­gar pro­duc­ers the up­per hand.

QSL trea­surer Stephen Stone said an im­por­tant mar­ket dy­namic was cur­rently in play, with su­gar con­sumers now the more vul­ner­a­ble mar­ket par­tic­i­pant and mar­ket spec­u­la­tors no more than short-term driv­ers of volatil­ity.

Mr Stone said gen­eral mar­ket per­cep­tion had dis­counted talk of a good crop in the world’s su­gar pow­er­house Brazil, and was now more fo­cused on de­mand in Europe and Asia, and a lack of wa­ter for su­gar pro­duc­ers in the North­ern hemi­sphere.

“In­dia and China are de­vel­op­ing mar­kets where weather has and may con­tinue to cut pro­duc­tion fore­casts,” he said.

“The last time In­dia had su­gar prices at this level, the ICE 11 raw su­gar price was trad­ing closer to US30c/lb.”

Mr Stone said that due to a pe­riod of cur­rency weak­ness, Brazil­ian pro­duc­ers were al­ready well priced, which made con­tin­ued su­gar price strength more likely. Mar­ket up­side for the 2016 Sea­son re­mained more prob­a­ble than deep price cor­rec­tions to the down­side. As a re­sult, con­sumers were now hop­ing to see 14c/ lb-14.50c/lb for their un­der­weight hedg­ing pro­grams.

In the white su­gar mar­ket, re­fin­ing pre­mi­ums are cur­rently trad­ing at about US$110 per tonne and have spent very lit­tle time be­low US$90 per tonne in the past six months, af­ter av­er­ag­ing US$85/t dur­ing the past two sea­sons.

“As a mea­sure of de­mand, pre­mi­ums con­tinue to re­flect a mar­ket be­com­ing in­creas­ingly tight,” Mr Stone said.

The Brazil­ian Sug­ar­cane In­dus­try As­so­ci­a­tion has de­layed crop up­dates, di­lut­ing pos­i­tive pro­duc­tion news, and fore­cast­ers now sug­gest wet weather is on the hori­zon.

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