Thursday saw a rise on Raw Sugar Futures as it was buoyed by several hints of developing refined sugar demands.
The March delivery for Sugar Futures soared by at least 1% in which is valued around 14.39 cents a pound on the ICE Futures U.S. exchange.
The demand of refined sugar had poor records for the past periods. This has indeed had a negative effect on the prices of raw sugar. The white premium – the difference between the white and raw sugar, has experienced a severe decline to a level where it was not adequate for sugar refiners to cover production costs.
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Just this Tuesday, the London-Traded white sugar market went under an unexpected influx of buyers, causing a surge to the front-month contract rates and the white premium. According to sources, the spread between the December and March deliveries surged to as high as $2.3 a ton from a negative expanse of $4.3. As for the white premium’s data, the futures soared to $62.75 per ton which is a rise from the previous price of $53.50.
Shareholders cannot pinpoint as to what instigated the sudden buying, but investors told reports it was likely because of the investment funds’ adjustments to the European Production.
"It may be the case that everyone has overestimated the pressure of the new quota-free EU crop would bring to bear on the whites market," Senior Trader Nick Penney told reports.
It is also believed that the bounce back in the white premium can indeed help the raw sugar’s demand as such can make producers comeback to the market to fasten their production.
Analysts in Brazil are currently estimating that the crop year may come to an end earlier than expected because of the lingering dry weather. With this, sugar from the largest growing country could face a reduction in supply.
As for the other countries, Head of sugar and ethanol Bruno Lima told reports that India and Thailand would expectedly face a delay in sugar harvests which could also lead to “a short-term window of very low supply."
To further elaborate on the other contenders in the futures market, November Orange Juice futures climbed by 0.6% while cocoa for the December soared by 0.3% which finished at the level of $2,084 per ton. December Deliveries for Arabica Coffee increased by 1.6% which ended at $1.2720 per pound as Cotton for December deliveries declined by 0.8% which concluded at the level of 68.27 cents per pound.
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