News
22.01.2010
Sugar May Advance 20% in First Half, Top Thai Exporter Says
Sugar futures may climb 20 percent by June, extending the rally to the highest level since November 1980, as global demand exceeds supply, said Thai Sugar Trading Corp., the country’s top exporter.
Prices could increase to 35 cents a pound by mid-year, Piromsak Sasunee, the general manager, said in an interview. Raw sugar for March delivery, the most active contract, ended at 29.26 cents a pound in New York yesterday.
India, China, Indonesia, Pakistan, Egypt and Russia are among nations planning to buy sugar to cool domestic prices, straining supplies forecast by broker Czarnikow Group Ltd. to lag behind demand by 13.5 million tons in the 2009-2010 season. Sugar had its biggest annual gain since 1974 last year because of rains and drought in Brazil and India, the largest growers.
“The market remains bullish,” Piromsak said in Bangkok yesterday. “The price is on an upward trend. India will be a key factor driving the market this year.” Thailand is the world’s second-biggest exporter.
India, the biggest consumer, may buy 2 million tons of refined sugar in the year to Sept. 30, a nine-fold increase from the previous 12 months, said R.L. Tamak, business head of sugar at a unit of Olam International Ltd., in an interview this week. Al Khaleej Sugar Co., the world’s top refiner, forecast this month that India would buy more than 2 million tons of the refined variety this season.
El Nino
Raw-sugar for March delivery advanced as much as 2.4 percent yesterday to 29.82 cents a pound in intraday trading, the highest level since January 1981. White sugar for March delivery added 1.2 percent to end at $759 a metric ton in London.
“Prices may be steady or decline in the second half of the year because of an expected increase in production from Brazil and possible divestment in commodities by speculators,” Piromsak said, without providing a forecast.
Global supply this year may continue to be curbed by poor weather, Piromsak said. El Nino, which can reduce rain and cause drought in Asia, may reduce sugar production in Thailand to around 7.1 million tons this season, he said.
The country’s output may total 7.3 million tons, less than the 7.6 million tons forecast previously because of dry weather, Apichart Jongskul, secretary general for the Office of Agricultural Economics, said on Jan. 13.
El Nino may curb production in the Philippines, squeezing supply from Southeast Asia’s second-largest exporter if it lasts for five months, Aida Ignacio, deputy administrator at the Sugar Regulatory Administration, said Jan. 19. Reduced output may make the country an importer for a second year.
Thai Exports
Shipments from Thailand may be “slightly” more than 5 million tons this year, little changed from 2009, said Piromsak. The forecast is less than the 5.52 million tons predicted for this year by the Office of Agricultural Economics. Exports were 5.3 million tons last year.
“Exporters are striving for higher sales to benefit from higher prices but that is hardly possible as adverse weather limits the supply” from Thailand, Piromsak said.
Thai Sugar expects to export 2 million tons this year to markets including Indonesia, Japan, Cambodia, India and Taiwan, up from 1.8 million tons in 2009, he said.
Bloomberg
