Author: Michael Ferrari, PhD
VP, Applied Technology & Research
After almost reaching the 23 cent mark last week, September sugar is back down below 22, helped by a more active monsoon pattern towards the end of last week. The rains are particularly helpful for Uttar Pradesh, India’s largest cane growing region. The danger here is that we are hearing many in the market talk of a monsoon ‘revival’, and we do not believe this to be the case. We do see some short term improvement that will help both northern and southern India’s cane crop over the next two weeks. However, the longer range outlook is still looking to remain dry through the end of September, and the current softening seen in the market may provide another opportunity to enter Mar10 positions. That said, at this stage in the year, we still believe that much of the talk in the market about 40+ cent world sugar are exaggerated, and we are awaiting a correction once most global balance sheets start to show more agreement. This is not diminishing upside risk potential in the short term, but our longer term view as we approach 4Q09 is for price levels to pull back into the teens.
