World: Sugar’s rally to a six-year high on borrowed time as glut looms

Published 2023년 2월 7일

Tridge summary

The world is expected to have its first sugar surplus in four years, but prices have reached a six-year high, causing inflation and potentially increasing the cost of baked goods, candy, and soft drinks. This is due to weaker output in India, which may lead to export caps and diversion of cane to ethanol production, as well as production challenges in Europe. Brazil, the top exporter, is expected to have a large crop, but it won't be available until April. The tight market is also causing concerns about port congestion and potential price increases in physical sugar premiums. The food and beverage industry in top importer Indonesia is worried about the tight supply, and speculation is believed to have fueled the recent rally, with a likely surplus expected to lower prices.

Disclaimer:The above summary was generated by Tridge's proprietary AI model for informational purposes.

Original content

(Feb 7): The world should end this season with its first sugar surplus in four years, but you wouldn’t know it from how prices have surged. Futures hit a six-year high last week, threatening more inflationary pain by increasing the cost of making baked goods, candy and soft drinks. While top exporter Brazil is set to collect a much bigger crop, those supplies won’t arrive until harvesting starts around April — and right now the market is tightening. That’s because weaker output will likely force India to cap exports, while European production has been hit by drought and now faces uncertainty after a pesticide ban. Plus, Indian mills are diverting more cane to make ethanol and China’s reopening could lift demand. There are already signs that sugar’s rally is feeding through to higher retail prices for goods in grocery stores in the US and Europe. “The biggest concern is stocks are tight globally,” said Rahil Shaikh, managing director of trader Meir Commodities India Pvt. “As of now ...

Source: Theedgemarkets