Author: Michael Ferrari, PhD
VP, Applied Technology & Research
World sugar futures are starting the week off with some strength, as many analysts seem to be agreeing on an oversold market. While we do
not like to use this market adjective loosely, the drop from nearly 30 cents to 16 cents is a significant a retreat over a short time span, in light of the present shortage in physicals. While the weather pattern for primary growing origins for the next 3-6 months will help to narrow the S-D gap, the deficit still exists, and the recent slide is not justified when looking at the supply situation.
As such, we do expect more buyers to start to come back into the market as sub 20 cent sugar, in the context of $85 crude, may be a bargain for the remainder of 2010. As a side note, we are keeping close tabs on developments and the potential emergence of a stronger market in high intensity sweeteners (HIS) and stevia in particular. According to a recent Licht report, global HIS consumption has increased between 4-5% last year; when viewed in light of the well-circulated forecast for a sugar ‘glut’ in India during the 2010/11 (Oct/Sep) crop year, longer term growth may be present, but tempered.
