HOW MUCH ARE WE REALLY TALKING ABOUT HERE?
The global sugar market remains in a rut, Europe’s sugar industry is literally shriveling under the heat of the sun and the pressure of low prices, India’s industry continues to drown the rest of the world in sugar while from Brazil to Africa to Asia producers are just trying to survive.
How can a more than 20-year-old sugar information website eke out a place amidst this chaos and ever-shrinking margins?
The answer, simply, is to bring the market something it doesn’t currently have. Transparency. That’s why as the summer was racing to its end, Sugaronline launched a project it had been keeping under wraps for several months: its new cash prices service. By bringing into the fold a veteran with more than 30 years of commodity price discovery untaint- ed by a career entrenched in the sugar industry, we sought to crack the nut that no one else had managed to do before by shedding light on Europe’s frustratingly opaque sugar market.
Of course, there are other companies out there doing price discovery, but the market doesn’t really believe those prices. And that’s not to say that they believed ours straight out of the gate either, but they’re start- ing to, and here’s why.
Markets for sugar, like other agricultural commodities, are complex and multi-layered and driven by changing weather but also by changing policies. Contracts between mills and large industrial buyers are quite naturally confidential but the European Commission compels mills to contribute ALL their transactions each month and analysts within the Commission use that data to derive three regional average prices, as well as the oft-quoted EU average. This EU average price currently sits at €320 per tonne (with a standard deviation of €35/t) for July.
22 | ADMISI - The Ghost In The Machine | September/October 2019
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