Raw sugar rallies to 18-month high as supply concerns deepen
Production in India will fall 7.9% in the 12 months starting 1 October
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New York: Raw-sugar futures climbed to the highest in more than 18 months as Asian dryness heightens concern that supplies will trail demand, trumping an outlook for bigger output in Brazil, the world’s largest producer and exporter.
Production in India, the second-largest cane-sugar grower, will fall 7.9% in the 12 months starting 1 October after drought hurt crops, trimming ending stockpiles for a second year in a row, a unit of the US Department of Agriculture said on Tuesday. Prices rose the past three months on projections for a second-global deficit. Citigroup said Wednesday it’s bullish on imports by China as falling profitability discourages production.
“An increasingly tighter Asian supply situation has the market trending higher,” founder David Hightower said in Chicago-based Hightower Report. Given India’s situation, “Brazilian and Thai exports are likely to be in strong demand.”
Raw sugar for July delivery climbed 2.5% to settle at 16.65 cents a pound at 1:02pm on ICE Futures US in New York, after reaching 16.79 cents, the highest for a most-active contract since 20 October 2014. In London, white sugar for August delivery rose 1.9% to $476.80 a tonne on ICE Futures Europe, after touching $479.20, the highest since 30 June 2014.
Data from Brazil industry group Unica showed millers in the country’s main sugar-producing region more than doubled processing in the first half of April, fueling an outlook for record output this season. Bloomberg