EVERYONE SEEMS SWEET ON SUGAR


Since the beginning of 2023 prices have rallied nearly 8.50 cents to hit their highest level since 25 October 2011 in late April.


The sugar market has been ‘on fire’ for the past three months to quote several analysts. To put this in perspective the average annual price range for the last five years has been just over 5 cents. Prices reached 27.41 cents just before the May 2023 expiry. Somewhat unsurprisingly they have fallen back over the past few weeks but still remain at exalted levels.


Back in February, many were scratching their heads as to why prices were above 22 cents. However, chatter about a potential drop in the expected Indian and Thai production was emerging.


A PERFECT STORM Come the Dubai sugar conference the industry had whipped themselves into a bull frenzy. However, no one at the conference predicted prices to rally above 24 cents never


mind another three cents. A perfect storm started to emerge. Indian production did, indeed, stall and initially, predictions of above 36 million tonnes turned out to be around 3 million tonnes too high. Thai production also disappointed. The funds, having started to build a long position late last year and rolled positions at a great premium sat back and watched the market continue to improve. It was the end users who had to endure the pain as they were forced into buying for once not being saved by the funds liquidating.


The other factor was the fact that Brazilian mills had done virtually all their pricing for 2023 by the March expiry so there was little selling above the market as prices started to soar. Things were exacerbated further by a late start to the Brazilian CS harvest due, ironically, to rain after the region had endured a huge drought in 2019/20.


8 | ADMISI - The Ghost In The Machine | Q2 Edition 2023


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