Thursday, December 03, 2009
LONDON: London (Liffe) benchmark white sugar futures on Wednesday touched a record high of $629 per tonne, up over 1.5 per cent, driven by expectations of strong cash demand from South Asia for refined sugar.
“The engine in the sugar market is end-user demand, particularly for whites,” said Nick Hungate, a soft commodities trader with Rabobank.
“This is mainly Indian and Pakistani demand for white sugar.” India’s growing appetite for whites was due to delays in production constraining mills’ capacity to process raw sugar, and insufficient imports of raws to date during a period of high prices and negative import margins.
London March white sugar futures eased back from the record peak to stand at $627.00 per tonne, up $8.00 or 1.3 per cent, in brisk volume of 7,087 lots at 1538 GMT. Barclays Capital analyst Nicholas Snowdon said the market has been buoyed by a report that India’s sugar output may dip below forecasts, and the world’s top consumer’s expressed desire to build stocks.
“Together these two bits of information have helped to reassert India as a supportive dynamic for prices,” Snowdon said. Snowdon said Indian demand, combined with adverse weather in top producer Brazil “should act as a catalyst for the next rise in prices.”
He added, “There has been some indication that there is going to be shift towards whites in the composition of imports into India so that has been supportive for the whites premium.
“The increasing weight of fresh supportive data really indicates that prices will have to move upwards.” Rabobank’s Hungate said he believed white sugar futures had room for $20-30 per tonne upside in coming weeks, driven by South Asian demand.
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