Overproduction Weighs Down White Sugar Prices
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Photo Credit: knaakle
The market price for white sugar declined on hunch that overproduction will make sugar market go stale, pulling the price of sugar down to a five month low.
Next season Brazil, the world’s largest sugar cane grower, will be adding to sugar production by 16 percent that translates to approximately 500 metric tons — an 85 percent output, according to Czarnikow Group Ltd. This will boost output on the national level by about 7.5 percent to 35.9 million tons, translating to a global glut increasing from 1.1 to 1.6 million tons by the next season, Czarnikow said further.
Referring to sugar futures, Czarnikow also said that it will “reflect a more bullish outlook linked to rising ethanol demand … encouraging producers to stay committed to sugar. The market will struggle to absorb the build-up in stock that has accumulated during the two previous seasons.”
White sugar intended for August came down to a low $2.80, or 0.9 percent, to $321 per ton, the lowest ever counting from January 2 closing prices.
Sugar traded at $321.50 today in London. Sugar’s decline is at 4.6 percent this month.
July delivery prices dropped 0.01 cents, or 0.1 percent to 10.08 cents per pound on ICE Futures U.S., with futures for July 2009 delivery trading at 13.43 cents per pound.
“Prices for 2009 now represent a hope for a more bullish future that, almost month-by-month, appears to be receding before us,” added Czarnikow.
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