Sugar glut

Commodities Nov 08, 2012 No Comments

Sugar glutRaw-sugar futures fell 19 percent to 18.95 cents a pound this year on ICE Futures U.S. in New York. Prices, which reached 36.08 cents in February 2011, the highest since 1980, may drop to 18 cents by the year-end.

While cereals are scarce this year and see their prices drastically rising, sugar is abundant which has been dragging its price down since last summer. Sugar price fall has even accelerated this past month, especially since production in Brazil could bring a big surplus next spring.

Australia has increased its production this year, and India, the world’s largest consumer of sugar, might become a net exporter this year. Europe and Russia are also raising output of sugar beet. So, since last year and after four years of deficits, the world produces more sugar than it consumes, especially as the crisis has dampened demand.

China, the second biggest consumer of sugar, imported massively until the summer so that its stocks are now so huge that sugar freighters are diverted from their original Chinese destination to other countries like India, Indonesia or Malaysia. Middle East countries, traditional buyers, are also waiting a further decline in prices. However, despite the sugar glut, prices remain at a very high level: a little less than 20 cents per pound of brown sugar, $ 545 per tonne of white sugar. about the level of August 2009, which was a time of short supply!

Pascal Blanc

Pascal has implemented numerous software solutions in the areas of procurement, sourcing, spend management, supplier evaluation and performance. His clients include Fortune 500 companies in Europe, Asia and North America. He is a co-founder of Source & Procure.

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