Global sugar price lifts with arrival of March contract
http://www.abc.net.au/news/2015-10-08/global-sugar-price-lifts-with-march-contract/6836524October 11, 2015 at 3:20 PM
Global sugar prices have rallied in the past fortnight, leading analysts to hope the commodity has turned a corner after a year of weak prices.
The March 2016 contract on the New York futures market is today trading at 13.98 US cents per pound.
That is significantly stronger than the price of the now-expired October 2015 contact, which dipped below 11 cents twice in recent months - an extremely low value.
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Greenpool Commodities analyst Tom McNeill said the jury was still out, but there were positive signs.
"It's still a subject of discussion, but I think we have seen the bottom for this market this year," he said.
"At its low point [in August,] the October contract hit 10.13 cents per pound.
"There are still a few in the market who think it should have gone [down to] single digits and that we may revisit this point.
"However, there are more around who think that this current market has moved on from the gloom and doom of a few short weeks ago and is now in the process of moving higher.
Mr McNeill said much would depend on the movement of the Brazilian currency, the Real, which has plummeted this year and been a major downward force on global sugar prices.
The Real has fallen on the back of a struggling Brazilian economy, giving sugar mills in that country a distinct advantage.
The other major factor has been a global oversupply of sugar.
Nonetheless, the past fortnight has brought optimism that the worst is over.
Mr McNeill said the improvement was partly due to the expiration of the October 2015 contract, making the March 2016 contract the shortest term one.
"I think the March contract always was valued a little stronger than the October," he said.
"The October contract was seen to be the focus of the existing oversupply in the market to some degree."
Mr McNeill said another factor pushing up the sugar price in the past week had been an announcement by Brazilian oil company Petrobras that it would raise wholesale gasoline and diesel prices, which would strengthen ethanol prices.
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