Author: Michael Ferrari, PhD
VP, Applied Technology & Research

ICE sugar futures are up this morning, again pushing through the mid 16 cent barrier (Jul currently at 16.6).  Licht came out with a statement (reported via Bloomberg)  that higher production in Brazil & India is allowing them to raise their forecast for global production to 155 mmt for the 2009/10 (Oct/Sep) crop year; and that the S-D balance will finally move back into surplus status after nearly 3 years of deficit.  Readers of Weather Trends commodity notes will recognize that this is not news, as we have been discussing the switch back to a positive physical balance in the 2010/11 crop year for several months.  In spite of a favorable supply situation shaping up for the coming year, we still do see some support over the next few months as global demand for the sweetener has not been curtailed.  The current range is what we consider fair value for sugar, and as such, we are advising clients to continue to scale into long positions by buying on dips when we see pullbacks of around 8-9%.