US Could Run Out Of Sugar
London white sugar futures surged to new all-time highs Thursday as it was revealed that US food giants including Kraft Foods, Hershey's and Mars had written to US Agriculture Secretary Tom Vilsack saying that the US could "virtually run out of sugar". They urged Vislack to increase the amount of tariff-free sugar they can import.
Meanwhile, monsoon rains continue to elude northern India's sugar cane producing regions, cutting production there by an estimated 44%, according to the Indian Sugar Mills Association. The rainy season, which ends next month, has so far produced 29% lower than normal rainfall June 1 to Aug. 11.
Output in Maharashtra, India's largest producing state, is forecast to halve to 4.6 MMT this season, from 9.1 MMT last year.
Meanwhile global demand is seen outstripping production by 5-7 MMT in the coming season.
London white sugar surged $19.90 to an all-time high of $589.90/tonne.
Sugar Hits New Highs
London white sugar has surged to fresh all-time highs this morning, reaching $566.50/tonne, the highest since trading began is US dollars in 1983.
In New York prices hit 22.44 cents/pound last night, a level not seen since 1981. Amazingly, we are still some way off New York's record all-time highs. Prices surged above 50 cents per pound in 1974-75 and 1980-81.
Sugar-broker Czarnikow said that global stocks at the end of the current 2008-09 will fall to 20 MMT, well below the current range of analysts estimates of 30-70 MMT.
Poor monsoon rains in India continues to hamper production there, with stocks dwindling ahead of the Diwali festival in mid-October. Meanwhile Egypt has lifted import duties to alleviate shortage fears in the run-up to Ramadan.
Sugar Surges To New All-Time High
London white sugar futures surged to a fresh all-time high Friday morning, with front month October hitting USD528.50/tonne, USD9.60 up on last night's close.
Monsoon rains continue to elude northern India, where much of the country's sugar cane is grown, whilst the Brazilian crop is being dogged by too much rain.
Increased demand from Mexico, who has also had weather problems with it's own crop, is seen further increasing the global sugar deficit this year.
India's monsoon rains were the lowest in over eighty years in June, although near normal rains in most areas in July gave rise to hopes that the worst was over. However, in the week to August 5th rains were 64% below normal, according to official weather data. Inadequate rains are forecast for the week ahead too, in a country where 60% of the land under cultivation relies entirely on natural rainfall.
I'll Name That Chart In One
It's certainly not London wheat that's for sure. This little baby is sugar, which hit it's highest in three years yesterday. This is New York sugar which peaked at 18.39 cents a pound yesterday, the highest since March 2006.
In London, white sugar closed at $474.90/tonne last night, the highest finish since July 2006, this morning it's currently at $475.90/tonne.
The reason for the rally? The lack of monsoon rains in northern India, the world's biggest consumer, leading the government there to meet yesterday to discuss an extension of the existing tax-free concessions on sugar imports.
World demand is outstripping supply by over six million tonnes at the moment, and India is set to potentially become the world's largest importer this year, having been a net exporter only a couple of years ago.
The reason for the switch? You guessed it, Indian farmers decided to get out of sugarcane production and get into the much more profitable grain sector!
