Kevin borg dis­cusses the un­ex­pected up­turn in world sugar prices

Central and North Rural Weekly - - FRONT PAGE - KEVIN BORG CANEGROWERS

AN UN­EX­PECTED rise in the world sugar price in re­cent weeks into the 14US c/lb range and reach­ing 14.24c US/lb (or $444 AUD per tonne IPS – In­ter­na­tional Pol Scale – sugar) has pro­vided much-needed re­lief to Aus­tralian cane grow­ers.

The sugar mar­ket is volatile, but at no stage did we see any com­men­tary giv­ing an in­di­ca­tion of this wel­come rally in the price.

Pub­lished fig­ures of around 10-15 mil­lion tonnes of sur­plus world stocks were not con­ducive to a stronger price.

It goes to show that even while we strug­gle to op­er­ate in doom and gloom si­t­u­a­tions, prices can re­cover quickly when re­act­ing to world con­di­tions and the talk that the world sur­plus could very rapidly turn into a deficit.

This oc­cur­rence pro­vides a wel­come break af­ter wit­ness­ing prices drop to below $320 AUD IPS sugar ear­lier this year. This meant grow­ers were re­frain­ing from pric­ing their fu­ture crops, and they were strug­gling on farm oper­at­ing at well below the cost of pro­duc­tion with high in­put costs.

To­day’s prices (at the time of writ­ing ear­lier in the week), although not bril­liant, are prices that grow­ers can take

❝sub­sidises In­dia its grow­ers to the tune of around $150 a tonne.

ad­van­tage of and be com­fort­able that they are at least cov­er­ing the cost of pro­duc­tion.

It seems this price rise has been spec­u­la­tor driven with news com­ing out of the EU that dry weather is play­ing havoc with its har­vest, caus­ing a re­duced crop and cre­at­ing dif­fi­culty lift­ing the beet crop out of the ground.

This dif­fi­culty dur­ing the har­vest could also lead to fur­ther losses be­ing sus­tained to the EU’s sugar make.

Rus­sia is in a sim­i­lar po­si­tion, mak­ing these two coun­tries pos­si­ble net im­porters.

Brazil’s ethanol par­ity with sugar is sit­ting around the 14.5c US/lb mark, caus­ing it to fur­ther in­vest in the pro­duc­tion of ethanol.

Brazil is also fac­ing dif­fi­culty with its har­vest with wet con­di­tions con­tin­u­ing to ad­versely im­pact the sugar con­tent of their crop while also caus­ing dif­fi­cul­ties with their har­vest be­cause of wet field con­di­tions.

In­dia con­tin­ues to do well in its pro­duc­tion and it is look­ing at ex­port­ing around three mil­lion tonnes.

This re­sult is from the coun­try’s own sub­si­dies, en­cour­ag­ing fur­ther pro­duc­tion in an al­ready over­sup­plied world mar­ket.

Canegrowers, along with other stake­hold­ers in the

VOLATILE MAR­KET: A rise in the world sugar price has given Aus­tralian cane grow­ers some re­lief and goes to show the prices can re­cover quickly. PHOTO: FILEAus­tralian sugar in­dus­try, con­tinue to lobby our own gov­ern­ment to join with other sugar-pro­duc­ing coun­tries to have In­dia in­ves­ti­gated by the World Trade Or­gan­i­sa­tion and to halt the dump­ing of sub­sidised sugar on the world mar­ket.In­dia sub­sidises its grow­ers to the tune of around $150 a tonne. This en­cour­ages over­pro­duc­tion, caus­ing the de­pressed prices we have re­cently wit­nessed.

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