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."
January 3, 2018
March raw sugar settled down 0.02 cent, or 0.13 percent, at 15.31 cents per lb after peaking at 15.37 cents, its highest since Nov. 28. But focus on bearish fundamentals returned after closely-watched commodity analyst Green Pool on Wednesday raised its projections of a global surplus in 2017/18 to 10.43 million tonnes, up from a forecast of 9.8 million. [nL8N1OY1Q7Read More
January 3, 2018
Green Pool hinted at the potential for sugar price weakness as it lifted to a 15-year high its forecast for the extent of supplies of the sweetener, citing strong production prospects in the likes of India and Thailand. The Australian-based analysis group raised by 629,000 tonnes to 10.43m tonnes its forecast for the world sugar production surplus in 2017-18 - while reducing by 664,000 tonnes to 1.11m tonnes its estimate for the output shortfall last season.Read More
November 2, 2017
The global sugar market is poised for a surplus of 9.80 million tonnes 2017/18, Australia-based analyst Green Pool said on Tuesday, amid stronger production and sluggish consumption growth.Read More
November 1, 2017
World sugar dynamics are the “worst” - for bulls – in at least 12 years, Green Pool said, hiking its estimate of the global output surplus, and hinting at the potential for further growth in stocks “into 2018-19 and perhaps beyond”.Read More
August 24, 2017
The global sugar surplus is expanding as Brazil, Thailand and the European Union drive world production to record, according to Green Pool Commodity Specialists. Supplies will outpace demand by 7.1 million metric tons in the 2017-18 season that starts in October in most countries, a 29 percent increase from a May forecast.Read More
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
The "war on sugar" being waged by governments and consumers to combat public health emergencies like diabetes is slowing growth in global demand, which along with other factors could signal a fundamental shift in consumption ahead. Consumption may grow at its slowest pace in seven years in 2017/18, according to analyst group Platts Kingsman. It forecasts a rise of 1.04 percent, nearly half the average growth of about 2 percent per year over the last decade. "Consumption is generally stagnating in developed countries," Tom McNeill, director at commodity analyst group Green Pool, told Reuters.Read More