Operators do not see a sugar shortage bit a change could trigger a sell-off
May, 20, 2021 Posted by Ruth HollardWeek 202122
The global sugar market is well supplied and has no shortage expectations in the short term, with the current high prices being supported by the Brazilian harvest and the large, long position held by speculators, something that may change in the event of a change in macroeconomic indicators.
This is the view of traders and brokers who analyzed the current sweetener market during a presentation at the Santander ISO Datagro New York Sugar and Ethanol Conference, this Wednesday.
They agreed that raw sugar futures contracts traded at ICE have a floor price of ethanol and sugar for Brazilian mills of approximately 16.50 cents per pound, and a ceiling of around 19 cents per pound, depending on possible unsubsidized exports from India.
“The visions converge at a similar interval,” said Louis Dreyfus sugar chief Enrico Biancheri.
Among the main factors for a change in the scenario are an even greater deterioration of the Brazilian harvest, which could cause panic in the countries of destination of the commodity or a change in the macroeconomic panorama in the United States and Europe, with the increase in inflation leading central banks to raise interest rates – which could trigger a sell-off by the funds.
Source: Nova Cana
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