Sugar prices hold on to gains and surge to more than four-year high
Global sugar prices rose to a more than four-year high yesterday, adding to gains made in a rally on Friday.
The sweet stuff was trading 1.25 per cent higher on Monday at 22.75 cents per pound on the benchmark InterContinental Exchange, as the effects of a lower-than-forecast cane crop in Brazil, the world's largest sugar producer, held firm.
Prices last reached this level in July 2012.
Alexandre Andrey, agricultural commodities research analyst at BMI Research, said prices were likely to remain around the current level in 2016 and into 2017.
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"The short-term rally has been driven by Brazilian cane data that came out last week showing that Brazil's harvest was not that strong, which came on top of some contracts that were expiring on Thursday – so both fundamental and financial factors have been at play," Andrey said.
"Even though production will likely improve next season, the global market will still remain in a fairly wide sugar deficit."
The price of raw sugar has rallied more than 40 per cent since the beginning of the year, in contrast to many other stalling commodities.
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The El Nino weather phenomenon disrupted production in several countries this year, including Thailand and India.
In mid-May, the US Department of Agriculture forecast global sugar consumption would again outpace production in 2016/2017 and would draw stocks to the lowest level since 2010/2011.