SUGAR AND THE COMMODITY BOOM
Commodities in general had a massive rise in prices since mid of 2020, after major losses earlier in the year due to the Covid-19. Sugar benefited from a turn around by investors in their approach to Agri and other Commodities.
Investors, in general, were running short positions until mid-2020. The fall on the Dollar and a risk diversification triggered short coverings and fresh new longs, absorbing producer selling and triggering consumer buying and pricing.
Sugar was no exception, but perhaps one of the exceptions was a tighter S and D and a fast-moving buying flow, which absorbed producer selling and left consumers chasing the market.
SUGAR TRADE FLOW World Sugar Trade (from exporters to importers) rose from 51 mln m/t in 2019 (56 mln in 2018) to 60 mln m/t in 2020. We had the usual 21/22 mln m/t of White Imports, but we had close to 38 mln m/t of Raw exports, about 8 mln m/t higher than in 2019 (33 mln in 2018).
Some regions of the World had lower crops like the EU, Pakistan and Thailand and therefore triggered a shift in supply. Due to a stronger White Premium (less white sugar producer selling) we had a higher flow of Raw imports by tolling Sugar Refineries (raws in whites out).
We also had some re-stocking by some destinations like China, Bangladesh, West Africa etc… Lower imports in 2019 (falling market) allowed for stocks at destinations to be consumed and lower prices in early 2020 triggered some re-stocking also.
The Far East, thanks to China and Indonesia, imported 3,5 mln m/t more than in 2019, a total of 19 mln m/t, up from 15,5 mln m/t in 2019 (17,3 mln in 2018). Most of the increase was on Raw Sugars.
Africa is also a larger sugar importer and received close to 13,2 mln m/t, about 1,2 mln m/t more than in 2019 (12,9 mln in 2018).
The Sugar World Trade was also affected by logistics constraints. Freight rates plummet in early 2020 (Break Bulk/Bulk vessels) but as container rates rose strongly (higher demand for containers and longer utilisation) we ended up with a stronger demand for BB/Bulk vessels and freight overall rose again.
THE FAR EAST, THANKS TO CHINA AND INDONESIA, IMPORTED 3,5 MLN M/T MORE THAN IN 2019, A TOTAL OF 19 MLN M/T, UP FROM 15,5 MLN M/T IN 2019 (17,3 MLN IN 2018). MOST OF THE INCREASE WAS ON RAW SUGARS.
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