Global sugar prices are down around 19% this month while raw sugar has fallen 8% last

week alone," according to an ET report. We believe there is considerable downside risk to sugar prices, forecasting 22 cents/lb in 2012 and 19 cents/lb in 2013, i.e., 15-17% below forward curve," said the report. the world's second-biggest producer after Brazil, could rise to 26.5 million tonnes in 2011/12, Jayantilal B. Patel, president of the National Federation of Cooperative Sugar Factories Ltd (NFCSF), told an industry meeting yesterday. n 2010/11, with global prices tumbling on a world surplus of sugar, India is likely to have produced around 24.2 million tonnes and has exported 1.5 million tonnes. ET ugar futures were up for a third day on Wednesday, climbing to a three-day high as lingering concerns over sugar crops in Brazil and speculation of increased demand from China buoyed prices. On the ICE Futures U.S. Exchange, sugar futures for October delivery traded at USD0.2505 a pound during European morning trade, jumping 0.68%. It earlier rose by as much as 1.4% to trade at USD0.2539 a pound, the highest price since September 23. Concerns over Brazil’s sugar harvest continued to boost prices after ICAP do Brasil, the nation’s biggest sugar industry group said last Friday that harvests from sugar-cane crops were expected to fall short of a previous estimate, as adverse weather affected crops in recent weeks. Brazil is the world’s largest sugar producer and exporter, with the U.S. Department of Agriculture estimating the nation accounts for nearly 20% of global production and 39% of global sugar exports. German lender Commerzbank said in a report Tuesday that it forecast sugar prices to average USD0.2700 a pound in the fourth quarter of 2011, before dropping to USD0.2600 a pound in the following quarter. http://www.forexpros.com/news/commodities-news/sugar-futures-gain-on-brazil-crop-woes,-chinademand-outlook-224566 EUThe bloc has already imported 280,495 metric tons of raw- sugar for refining, 3,761 tons of raw sugar not for refining, 52,697 tons of white, or refined, sugar and 20 tons of other sugars at reduced duty under the last four tenders, according to the commission. http://www.businessweek.com/news/2011-09-28/eu-to-hold-last-tender-to-import-sugar-at-reducedduty-today.html

which is 5. Masterforex-V Academy. when the harvesting campaign is nearly over. On the other hand. Brazil is planning to produce 30. preliminary forecasts show that in 2011/2012 the production of sugar may exceed the consumption due to favorable prices.profi-forex.63M tons of sugar (in 2010 it produced 33. the current situation is not that bad.8% more than in mid 2010. The global consumption per capita is expected to stay the same – 24kg a year per capita. South America.7M tons. If to take in to account that over the last 12 months sugar has gained in price 62% (according to the World Bank). we can make certain conclusions about the global production of sugar. . Mexico is also planning to make more sugar in 2011/2012 due to this year’s record sugarcane crop. The emerging economies are expected to produce 10% more sugar (128M tons) as compared to 2010.html ugar market outlook 27 September 06:56 AM Now. In mid 2011 the global production reached 165. Columbia is the second major manufacturer in South America. the developed economies are expected to produce only 37. According to the Department of Commodity Trading.http://www. It is expected to make 2. It is said that 45% of the sugarcane crop will be refined to make sugar.5M tons).5M tons of sugar.us/news/entry4000001940.7M tons (a 45 decline).5% up to 165M tons. In 2011/2012 the global consumption of sugar will grow by 1. It will allow Mexico to boost the export of sugar to the USA.

S. It is expected to produce 2. In China the figures haven’t changed despite a 40% increase in the sown area of sugar beet. 3:17 AM EDT More From Businessweek      Cherkizovo Jumps Most in 15 Months on Plan to Buy 2% of Stock Russia Understands Importer Concerns.99M tons). Europe. which is a stunning increase (+15.5%). mainly at the expense of India and Thailand. Union Says September 28.5% increase.Africa. Commodities Day Ahead: Coffee Slumps on Record Robusta Crop Sasini of Kenya Gains Most in a Week as Tea Prices Climb Ukraine May Export Up to 25 Million Tons of Grains This Year Story Tools    inShare  .18M tons. Therefore. France.4M tons to reach 17. the EU’s number 1 in terms of sugar production. The reason is droughts.html Russia’s Sugar Output From Domestic Beets Climbs 70%. Grain Union Expert Says U. the further development is hindered by poor infrastructure.8M hectares (+15%). South Africa is the continent’s leader in terms of sugar production. Asia.7M tons of sugar. Pakistan will produce 3. which is a 2. It became possible to the expansion of cultivation areas and higher refining capacity. is expected to produce 4. It is expected to produce 60.com/news/2011-09-28/russia-s-sugaroutput-from-domestic-beets-climbs-70-union-says. is expanding the sown areas of sugar beet while leaving the sown areas of sugarcane unchanged. 2011. Africa’s number 2. Egypt.6M tons of sugar (+8%). The total amount of sugar produced in Africa will be roughly equal to 11M tons. Germany will increase its production from 3. India’s sown area of sugarcane is equal to 4.39M tons up to 4.6M tons (against last year’s 3.businessweek. However. The production of sugar in the next agricultural year (starts on Oct 1st) may increase by 2.4M tons of sugar. China has become the world’s biggest sugar importer.4M tons (the highest value over the last 5 years). http://www.

html La Nina Could Hurt 2012 South American Sugar. output could be lower than expected. http://online.   add to Business Exchange E-mail Print By Marina Sysoyeva Sept. Early October is considered the limit for the rains' arrival before significant crop damage can occur. Crops were damaged last year by the nation’s worst drought in a half century. a process that leaves the coffee fruit behind. 28 (Bloomberg) -.12 million metric tons since harvesting and refining began in July. the world's largest producer of the two crops. Weather has been abnormally dry in top coffee grower Brazil's main production regions.com/article/BT-CO-20110927-712186. Coffee Output     Article Email Printer Friendly Share: facebook ↓ More  Text By Leslie Josephs Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--The current La Nina weather phenomenon could hurt coffee and sugar production next year in South America. a cooling of the equatorial Pacific Ocean. the Sugar Producers Union said on its website yesterday. La Nina. Rains generally hit in September but have been late this year. when the country produced 657. .200 tons.Russia’s sugar output from domestically grown beets reached 1. up 70 percent compared with a year earlier. brings dry weather to southern South America and heavy rains to the northern Andean region. and push up their prices globally.wsj. Without the timely rains that cause coffee trees to flower.

" said Maria Teresa Martinez."People are starting to get concerned.com/article/321769/Sugar%20Futures%20set%2 0to%20Fall.45 cents per pound. "It slows the development of the cane. the world's biggest producer of mild washed arabica coffee beans. Brazil-based Cazarini Trading Co. since a lack of rainfall makes it more difficult to plant new crop and lowers the quality of cane already in the ground. Meteorology and Environmental Studies Institute. This was the highest sugar futures have been since 1980 when they reached nearly . September 23." Brazilian sugar production is also at risk of dry weather.36 cents per pound this February.28 cents. adding: "We would only enter this trade closer to the end of the year on the assumption that risk aversion had moderated and that the La Nina phenomenon had strengthened to more convincing levels.com http://www. Sugar touched ." -By Leslie Josephs.S. Heavy rains are expected to hit Colombia." said Thiago Cazarini. said it is too early to tell how long or how severe La Nina will be. National Oceanic and Atmospheric Administration's Climate Prediction Center." said Michael McDougall. Torrential rain knocks fruit off coffee trees and can cause disease.insidefutures. Sugar has made four moves of plus or minus more than 50% since the beginning of 2010. you might have to replant. and could hurt the country's chances of increasing production in 2012 after three weather-ravaged harvests. This could push up global coffee prices. deputy director of the U. "We expect the rains to be 50% to 70% higher than normal in some coffee-growing regions. no matter how dry. a senior vice president at brokerage Newedge. 2011 by Andy Waldock of Commodity & Derivative Advisors The Sugar market is one of the most volatile commodity markets. we see it lasting until early 2012." he said. a highland variety sought for its rich flavors. October sugar futures are around . leslie. owner of Varginha. Currently. I believe the .html Sugar Futures set to Fall Friday. 212-416-4055. "We believe coffee may be the best commodity to exploit a developing La Nina phenomenon. "If it stays dry. a meteorologist at Colombia's Hydrology. Dow Jones Newswires. Mike Halpert.josephs@dowjones." said Deutsche Bank in a note Tuesday. "At this time.

food based ethanol production pits the forces of hunger and fuel against each other. Hover . This spread advanced to more than $160 per ton which. First of all. The second primary contributor to sugar's rally has been the refining spread. The final push in upward sugar prices is more persistent. agriculture is responsible for 20% of their labor force compared to less than 1% here in the U. World sugar production is always volatile. Technically.S. just like here in the U.S. Finally. I expect the market to ultimately test its fundamental uptrend around . the supply side of the sugar market looks bountiful. Reports from Thailand. Europe and Russia look very favorably towards large harvests. rising crop prices coupled with rising fuel prices combine to tax individual households and define the upper boundaries consumer demand. This is similar to the temporary conditions we discussed in February of the crude oil crack spread that drove gas prices higher even as the price of crude oil declined.fundamental supply factors in this market are set to drive sugar down to a more normal valuation around . This represents a value target in line with the global population growth and consumption patterns. Brazil is responsible for nearly half of the world's sugar production. The shipping issues in Brazil have been figured out and they are also reviewing the possibility of cutting back ethanol subsidies. there have been logistical issues in Brazil's harbors. Better food and a more varied diet are typically the first splurges for a rising standard of living. Brazil is also a major exporter of soybeans. The growth in the economic viability of developing third world countries has led to increased sugar consumption. the annual surplus or deficit between sugar consumption and demand has been split nearly 50/50 on an annual basis. cattle and other agricultural goods. attracted significant sugar purchases for delivery to refiners. the market inefficiency of the refining spread has been fully exploited and is now back to normal levels. Therefore. the remaining long positions appear to be held by small traders and Commodity Index Traders while commercial traders are actively selling their forward production at these prices. This is the difference between the price at which raw sugar can be purchased and the refined sugar can be sold. Major snafus in the harbor construction projects currently under way caused delivery tightness in the March sugar contract and contributed to the market's peak in February. The growth of purchasing power overseas will continue to fuel this trend and will place a higher floor on sugar futures prices in the years to come. Thus. Over the last 20 years. Furthermore. The sugar based ethanol production of Brazil and other countries is far more efficient than the corn based ethanol industry in place here in the U. This year it looks like there will be a significant sugar production surplus. The competition for sugar delivery also made its way into the ethanol market. Sugar prices have generally rallied this summer based on four primary factors. However. Brazil. India. This leaves the market susceptible to a sell off as CIT's and small speculators will exit their long positions as the market turns negative.S. In fact.16 cents.16 cents.

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