THE BENCHMARK futures contract for international sugar prices has surged to its highest level in six years on the back of bullish news in both crop production and processing.
New York March 2023 raw sugar futures closed on Monday at US21.21 cents a pound, the highest level since early 2017.
Commonwealth Bank commodity analyst Tobin Gorey said heavy rain in India was influencing sugar processing in the nation's mills, some of the world's largest.
"Some of India's mills closing early because of rain has clearly worried the market," he said.
The implications for the world market are that India, traditionally a big exporters of processed sugar, will be less likely to export more, potentially leading to a situation where world stocks are in short supply through the first half of the year.
"Magnifying the worry is that the mill closures are in Maharashtra from where raws are most likely to emerge."
Other reports have suggested the rain will also negatively impact Indian production, possibly to the extent the Indian government may look to put in export constraints.
Elsewhere Mr Gorey said the market was also watching Europe with a keen eye.
There is concern that increasingly stringent EU regulations in regards to crop inputs, in particular pesticides, may limit European sugar beet production.
However, Mr Gorey said this would be a longer term story and would not be a key factor in the current steep price hike.
Gregor Heard
Gregor Heard is ACM's national grains industry reporter, based in Horsham, Victoria. He has a wealth of knowledge surrounding the cropping sector through his 15 years in the role. Prior to that he was with the Fairfax network as a reporter with Stock & Land. Some of the major issues he has reported on during his time with the company include the deregulation of the export wheat market, the introduction of genetically modified crops and the fight to protect growers better from grain trader insolvencies. Still involved with the family farm he is passionate about rural Australia and its people and hopes to use his role to act as an advocate for those involved in the grain sector.
Gregor Heard is ACM's national grains industry reporter, based in Horsham, Victoria. He has a wealth of knowledge surrounding the cropping sector through his 15 years in the role. Prior to that he was with the Fairfax network as a reporter with Stock & Land. Some of the major issues he has reported on during his time with the company include the deregulation of the export wheat market, the introduction of genetically modified crops and the fight to protect growers better from grain trader insolvencies. Still involved with the family farm he is passionate about rural Australia and its people and hopes to use his role to act as an advocate for those involved in the grain sector.
