Bullish and Bearish Factors of Sugar Commodity Prices, June 18 - Sugar prices rose to a 2-month high but remain well below Feb's 30-yr high. Bullish factors include (1) export delays in Brazil where as many as 68 vessels were waiting to load about 2.22MMT of sugar, according to shipping agency Williams Servicos Maritimos, (2) USDA forecasts for record global sugar consumption in 2011-12 of 162 MMT, and (3) reduced output in Australia, the third largest sugar exporter, after floods and cyclones may cut its sugar output to a 9-yr low of 3.58 MMT and may reduce its sugar output for the next 2-3 years.
Bearish factors include (1) ISO's estimate for a 4 MMT global sugar surplus in 2011-12 on increased production in Brazil and India, and (2) ISO's hike in its global sugar surplus estimate for 2010-11 to 1 MMT from a Feb estimate of 200,000 tons on higher output from Thailand and India.
Fundamental Outlook-Bull market correction-Sugar prices remain in correction mode as the USDA raised its global sugar output estimates for next year and ISO raised its global surplus estimates, but the longer-term outlook remains bullish on tight supply channels and the outlook for reduced output in Australia. ISO is forecasting a 1 MMT global sugar surplus for 2010/11 after 2-yrs of deficits. ISO is also forecasting a 1.7% rise in global sugar demand this year that will cut the inventory-to-consumption ratio to a 20-yr low of 32%.
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