Shortage of sugar sees global price climb higherhttp://www.abc.net.au/news/2016-05-13/shortage-of-sugar-sees-global-price-climb-higher/7413484
May 16, 2016 at 4:13 PM
A realisation of a global sugar deficit, coupled with political turmoil in Brazil, has seen the sweet commodity continue to rally in world trade.
Overnight, the July supply contract for raw sugar closed at 16.98 US cents a pound, down slightly from its peak during trade of 17 cents.
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Sugar has been one of the best performing commodities this year, with the price rise largely attributed to a significant supply shortage.
"We're in a deficit year after five years of surplus," said analyst Tom McNeill, from Green Pool Commodities.
"Production is about 8.6 million tonnes below demand."
Political upheaval in Brazil, the world's largest sugar-producing country, has also been a key factor in the price volatility this year.
Brazilian president Dilma Rousseff was suspendedovernight and faces impeachment over accusations she broke budget accounting rules.
With the country in recession, the vote to remove Ms Rousseff has been welcomed by currency traders.
"That's seen to have given the Real, the currency, upward movement and it also gives some upside to the sugar price," Mr McNeill said.
"The ceiling has always been created by the level at which Brazilian producers will hedge their crop.
"And that's where the currency and the politics comes into it."
Mr McNeill suggested a further appreciation in the Real would help to drive continued price rises.
More money for Australian growers
After years of relatively poor returns, the global price movement is news Australian sugar producers have been longing for.
The current indicative price for the 2016 harvest pool is around $520 per tonne, a massive increase on the 2015 pool which yielded $383 per tonne.
"We haven't seen these levels for five, six, seven years, so it's actually boosting the potential of the industry to earn income," Mr McNeill said.
A depreciation in the value of the Australian dollar since late April has also helped boost prices for local millers and cane growers.
Australia is the third-largest supplier of raw sugar in the world, with production valued at more than $2 billion.
Volatility the name of the game
Dry growing conditions in Thailand and India have added to the global production shortfall, and traders are trying to predict what a potential shift to a La Nina weather pattern could mean for crops later in the year.
Mr McNeill said speculators and hedge funds had also played a more active role in the sugar market recently, retreating from other commodities.
"I think we'll continue to see a lot of volatility ... we'll see some lower prices, some higher prices," he said.
"But I suspect once this deficit hits towards the end of this year, early next year, that's possibly when the market will peak, and I wouldn't hazard a guess at where that will be."
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July 3, 2017
Green Pool highlighted the threat to sugar consumption from the likes of health concerns and rival sweeteners as it raised by 837,000 tonnes its forecast for the looming world sugar production surplus. The Australia-based sugar consultancy revised up to 5.55m tonnes its forecast for the global output surplus in 2017-18, taking it to the largest since 2013-14.Read More
May 24, 2017
It’s not this year’s price crash that haunts the $150 billion sugar industry. It’s the fear of worse to come. Raw sugar’s 16 percent drop ranks it bottom of the 22 raw materials on the Bloomberg Commodity Index. Shocks to demand in top consumer India and prospects of more European supply are helping shift the market to a surplus, hurting prices. Yet beyond such market dampeners, hang darker clouds. After decades of stable demand growth, almost doubling per person since 1960, the world is heading for a tipping point as shoppers turn against the cola and candy blamed for an obesity epidemic in the rich world. At the same time, sugar has to compete with cheap syrups increasingly used in processed food. "Growth is not what it’s been," Tom McNeill, managing director of Green Pool, said in an interview. "There is undoubtedly a move by global bottlers and by a lot of global food manufacturers to reduce the sugar content in their products."Read More
May 24, 2017
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May 5, 2017
HOME COMMODITIES COMPANIES MARKETS OPINION DATA CALENDAR SUBSCRIBE Thurs 11th May 2017 PRINTABLE VERSION EMAIL TO A FRIEND RSS FEEDS 13:57 UK, 5th May 2017, by William Clarke Green Pool trims sugar deficit forecast, a touch... Sugar analyst Green Pool only slightly trimmed its forecast for a hefty sugar surplus next season, as consumption grows only sluggishly despite easing sugar prices. "Consumption is a major issue for sugar, with global consumption growing only slowly," Green Pool said. "Some growth is being seen in developing countries, while consumption is actually falling in some developed countries."Read More