Thread: Time to Plant Sugar Cane

The World Sugar price has just reached a serious high point rising 80% in the last twelve months. There are weather issues in India (not enough Monsoon) and South America (unseasonable rain during harvest) causing reduced availability of cane. Thailand farmers followed closely by Australian sugar farmers are rubbing their hands together with glee!

^ Yep, all my mates up in my home town (Home Hill, 100km south of Townsville) will certainly not be too upset to hear of the Indian and South American misfortune.

wifes family has 180 rai up in Kanchanaburi raising cane.

Hope the price of Rum doesn't go up.

....Well it's 2010 and Sugar is still looking good! The Chinese Government are looking to buy the sugar division of a 150+ year old, iconic Australian Company CSR, (originally Colonial Sugar Refining Company). The rapid growth in middle class consumers in China is rapidly increasing demand for sugar! Sugar prices are strong now, with the spot price now US26 cents a pound, some three times the price in June 2008.
Analysts are split on the CSR sugar division’s future earnings, with most predicting a big increase in calendar 2011 to $162 million AUS in earnings before interest and tax, but some figure it will fall the following year.
Bright Food will pay up to $1.5 billion AUS, including the $300m in debt being allocated as part of the de-merger.
Thailand should have some transport cost advantages, but it remains to be seen what happens to the local cane prices.

Should have invested a few years back on the market, oh well can't win'em all.

Feb. 9 (Bloomberg) -- A global sugar shortage, which drove prices to the highest level in three decades, may peak in the third quarter this year on demand from the U.S., Mexico, India and Pakistan, according to U.S.-based Tropix Capital Management.
“As we enter the second quarter, we enter the inter-crop period for South Brazil when export supply is minimal,” Sean Diffley, founder of the hedge fund and former head of sugar trading at ED&F Man Holdings Ltd., said by email. “Countries like Russia will return to the market in force. The acutest part of the deficit may not be apparent until the third quarter.”
India, China, Indonesia, Pakistan, Egypt and Russia are among countries planning to buy sugar to cool domestic prices, worsening a deficit that may reach 11.92 million tons in the year ending April 30, up from 8.32 million tons predicted in October, Kingsman SA said yesterday. The shortfall may be 5 million to 6 million tons this season, according to Tropix.
“The world stocks-to-use ratio should reach 20 year lows in the second half of this year,” said Diffley, who worked for 16 years at ED&F Man, one of the biggest sugar trader.
India, the biggest user, may need to import an extra 2.5 million to 3 million tons this season to meet a 7 million ton deficit, according to Kingsman. Pakistan, Asia’s third-biggest user, plans to purchase 1.25 million tons by June. The country “apparently bought 100,000 tons” from Cargill Inc. in the past few days, Michael McDougall, a Newedge USA senior vice president said yesterday in a report from an industry event in Dubai.

China Drought

China, the biggest consumer after India, may have a deficit of 3.3 million tons this year after drought and cold weather cut yields, the Guangxi Bulk Sugar Exchange Center said last month. Thailand, the second-biggest exporter, may produce 7.2 million tons in the year started in November, less than the forecast.
“There’s a real rationale to be invested in sugar, at least until March,” when the Brazilian harvest begins, Hussein Allidina, head of commodity research at Morgan Stanley, said in an interview in Dubai. Prices will extend gains as a deficit was expected to last through the season ending Sept. 30, he said.
Sugar output in Brazil, the top producer, may increase by as much as 4.4 million tons to 35.3 million tons in 2010-2011, as growers boost planting to take advantage of record prices, Plinio Nastari, president of research firm Datagro, said in an interview on Feb. 7 in Dubai. The global sugar market may have a surplus of 1.5 million tons next year, he said.
“The forward sugar curve already reflects the assumption that Brazilian production will rebound significantly,” Diffley said. “If we see another rainy harvesting period we may not see the surplus in 2010-11 that analysts are assuming is a given.”

‘Very Much Higher’

Raw-sugar futures for March delivery gained as much as 3.2 percent to 27.44 cents a pound on ICE Futures U.S., and traded at 27.11 cents at 8:48 p.m. Mumbai time. Prices fell 12 percent last week, the biggest weekly drop since October 2008.
“During the last great sugar bull-run, the market often paused for breath and consolidated for weeks before pushing sharply higher,” said Diffley. “Our estimate of the deficit is not reducing and that shipments from the export countries are on course for normal demand. What this suggests is that prices may need to go very much higher.”
Sugar had its biggest annual advance since 1974 last year as heavy rains and drought pared harvests in Brazil and India, the largest growers. Futures reached 30.4 cents on Feb. 1, the highest since January 1981.
“The last time around when prices rose above 30 cents, it stayed at that level for six months,” Jonathan Drake, head of sugar business at Cargill Inc. said in an interview. “Going by history, prices are going to stay high for at least six months. High prices will also be accompanied by greater volatility.”

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