Mar 29, 2023
Sugar to Get Even Costlier in Threat to Global Food Inflation
(Bloomberg) -- White sugar futures rose for a third day amid mounting supply concerns, elevating its premium over the raw sweetener to a six-month high.
The most active white sugar contract gained 0.2% in London trading while raw sugar lost 0.7% in New York. The premium for refined over raw sweetener was at the highest since September, boosting the profit outlook for processors.
Buyers are facing difficulties building up stockpiles as crops in several regions have been poorer than expected. Low fertilizer application in Thailand, excessive rains in India, and dryness in Europe, Mexico and parts of China led to several downward revisions to supply estimates.
In Thailand, the world’s fourth biggest grower, all but 5 of 57 millers already stopped crushing due to a lower-than-expected harvest, the Thai Sugar Millers Corp. said. Egypt and Algeria recently announced measures to restrict sugar outflows from the countries.
Crop issues removed 4 million metric tons from world trade flows in the first quarter of this year, StoneX analyst Ricardo Nogueira wrote in a report. Such volumes would be crucial to help ease current tightness in global supplies, especially since it will take time before a large output from Brazil can reach destinations.
However, Brazilian supplies may not bring much relief to the refined sugar market, said Michael McDougall, managing director at Paragon Global Markets. The country is the world’s top supplier of raw sweetener, but its production of refined is small.
In other soft commodities markets, cocoa, arabica coffee and cotton were all down in New York.
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