Newsletter summary
Brazil's drought and port congestion have affected global sugar market supplies, with sugar prices hovering around 19-20 cents per pound, declining market resilience and tight global sugar inventories, and any problem could trigger a price rise.
Text of news flash
[global sugar market supply risk increases, price fluctuations attract attention] the largest in the worldEmpireslotsBrazil, a sugar exporter, has recently faced supply risks in the global sugar market due to insufficient precipitation and congested ports. With supply and demand balanced, sugar prices have hovered around 19-20 cents per pound for weeks, compared with 28 cents a year earlier. New York Sugar week (NewYorkSugarWeek) last week, at the annual gathering of the sugar industry, industry experts warned of a decline in the market's ability to resist risks. MauroAngelo, chief executive of Alvean, the world's largest sugar trader, pointed out that global sugar stocks are at an all-time low, with an inventory / usage ratio of 37 per cent, the lowest level since 2010. JoseOrive, chief executive of the International Sugar Industry Organization (ISO), said the market would be subject to logistics conditions in Brazil. In the absence of India's export market, Brazil's share of global sugar exports could rise from 70% to 80%. Brazil and India together account for more than 40% of global sugar production. MarcelodeAndrade, managing director of soft commodities at Chinese trader COFCOInternational, stressed that the weather is an important risk factor for the market. If there is a weather problem in India, it could have an explosive impact on the market. TomMcNeill, managing director of GreenPoolCommoditySpecialists, said the hot and dry weather and port logistics in Brazil were worrying. He warned that any problems in Brazil could trigger a sharp reaction to sugar prices. Although the market remains stable at the moment, any problem could trigger a price rise. Over-reliance on the Brazilian supply market is seen as a major risk. Alvean's Angelo predicts that unless there is a major mistake in the forecast for Brazilian crops, there is no reason for sugar prices to stay at 20 cents. It is worth noting that dry weather is boosting sugar cane crushing and sugar production in Brazil in the early stages of the harvest, but there are considerable risks in the second half of the season. COFCO's Andrade revealed that the company had suspended sugar cane cultivation in Brazil due to low soil moisture and expected rain in May and June to be critical to the harvest. To sum up, the supply risk of the global sugar market is rising, and price volatility has become the focus of investors in the secondary market.
