Global sugar prices are down around 19% this month while raw sugar has fallen 8% last

week alone," according to an ET report. We believe there is considerable downside risk to sugar prices, forecasting 22 cents/lb in 2012 and 19 cents/lb in 2013, i.e., 15-17% below forward curve," said the report. the world's second-biggest producer after Brazil, could rise to 26.5 million tonnes in 2011/12, Jayantilal B. Patel, president of the National Federation of Cooperative Sugar Factories Ltd (NFCSF), told an industry meeting yesterday. n 2010/11, with global prices tumbling on a world surplus of sugar, India is likely to have produced around 24.2 million tonnes and has exported 1.5 million tonnes. ET ugar futures were up for a third day on Wednesday, climbing to a three-day high as lingering concerns over sugar crops in Brazil and speculation of increased demand from China buoyed prices. On the ICE Futures U.S. Exchange, sugar futures for October delivery traded at USD0.2505 a pound during European morning trade, jumping 0.68%. It earlier rose by as much as 1.4% to trade at USD0.2539 a pound, the highest price since September 23. Concerns over Brazils sugar harvest continued to boost prices after ICAP do Brasil, the nations biggest sugar industry group said last Friday that harvests from sugar-cane crops were expected to fall short of a previous estimate, as adverse weather affected crops in recent weeks. Brazil is the worlds largest sugar producer and exporter, with the U.S. Department of Agriculture estimating the nation accounts for nearly 20% of global production and 39% of global sugar exports. German lender Commerzbank said in a report Tuesday that it forecast sugar prices to average USD0.2700 a pound in the fourth quarter of 2011, before dropping to USD0.2600 a pound in the following quarter. http://www.forexpros.com/news/commodities-news/sugar-futures-gain-on-brazil-crop-woes,-chinademand-outlook-224566 EUThe bloc has already imported 280,495 metric tons of raw- sugar for refining, 3,761 tons of raw sugar not for refining, 52,697 tons of white, or refined, sugar and 20 tons of other sugars at reduced duty under the last four tenders, according to the commission. http://www.businessweek.com/news/2011-09-28/eu-to-hold-last-tender-to-import-sugar-at-reducedduty-today.html

http://www.profi-forex.us/news/entry4000001940.html ugar market outlook

27 September 06:56 AM

Now, when the harvesting campaign is nearly over, we can make certain conclusions about the global production of sugar. In mid 2011 the global production reached 165,7M tons, which is 5.8% more than in mid 2010.

According to the Department of Commodity Trading, Masterforex-V Academy, preliminary forecasts show that in 2011/2012 the production of sugar may exceed the consumption due to favorable prices. If to take in to account that over the last 12 months sugar has gained in price 62% (according to the World Bank), the current situation is not that bad. The emerging economies are expected to produce 10% more sugar (128M tons) as compared to 2010. On the other hand, the developed economies are expected to produce only 37.7M tons (a 45 decline). In 2011/2012 the global consumption of sugar will grow by 1.5% up to 165M tons. The global consumption per capita is expected to stay the same 24kg a year per capita.

South America. Brazil is planning to produce 30.63M tons of sugar (in 2010 it produced 33.5M tons). It is said that 45% of the sugarcane crop will be refined to make sugar. Columbia is the second major manufacturer in South America. It is expected to make 2.5M tons of sugar. Mexico is also planning to make more sugar in 2011/2012 due to this years record sugarcane crop. It will allow Mexico to boost the export of sugar to the USA.

Africa. The total amount of sugar produced in Africa will be roughly equal to 11M tons, which is a 2.5% increase. It became possible to the expansion of cultivation areas and higher refining capacity. However, the further development is hindered by poor infrastructure. South Africa is the continents leader in terms of sugar production. It is expected to produce 2.4M tons of sugar. Egypt, Africas number 2, is expanding the sown areas of sugar beet while leaving the sown areas of sugarcane unchanged.

Asia. It is expected to produce 60.7M tons of sugar, which is a stunning increase (+15.5%), mainly at the expense of India and Thailand. Indias sown area of sugarcane is equal to 4.8M hectares (+15%). In China the figures havent changed despite a 40% increase in the sown area of sugar beet. The reason is droughts. Therefore, China has become the worlds biggest sugar importer. Pakistan will produce 3.6M tons of sugar (+8%). Europe. The production of sugar in the next agricultural year (starts on Oct 1st) may increase by 2.4M tons to reach 17.4M tons (the highest value over the last 5 years). France, the EUs number 1 in terms of sugar production, is expected to produce 4.6M tons (against last years 3.99M tons). Germany will increase its production from 3.39M tons up to 4.18M tons.

http://www.businessweek.com/news/2011-09-28/russia-s-sugaroutput-from-domestic-beets-climbs-70-union-says.html Russias Sugar Output From Domestic Beets Climbs 70%, Union Says
September 28, 2011, 3:17 AM EDT

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By Marina Sysoyeva Sept. 28 (Bloomberg) -- Russias sugar output from domestically grown beets reached 1.12 million metric tons since harvesting and refining began in July, up 70 percent compared with a year earlier, when the country produced 657,200 tons, the Sugar Producers Union said on its website yesterday. Crops were damaged last year by the nations worst drought in a half century.

http://online.wsj.com/article/BT-CO-20110927-712186.html La Nina Could Hurt 2012 South American Sugar, Coffee Output

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By Leslie Josephs Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--The current La Nina weather phenomenon could hurt coffee and sugar production next year in South America, the world's largest producer of the two crops, and push up their prices globally. La Nina, a cooling of the equatorial Pacific Ocean, brings dry weather to southern South America and heavy rains to the northern Andean region. Weather has been abnormally dry in top coffee grower Brazil's main production regions. Without the timely rains that cause coffee trees to flower, a process that leaves the coffee fruit behind, output could be lower than expected. Rains generally hit in September but have been late this year. Early October is considered the limit for the rains' arrival before significant crop damage can occur.

"People are starting to get concerned," said Thiago Cazarini, owner of Varginha, Brazil-based Cazarini Trading Co. Heavy rains are expected to hit Colombia, the world's biggest producer of mild washed arabica coffee beans, a highland variety sought for its rich flavors, and could hurt the country's chances of increasing production in 2012 after three weather-ravaged harvests. Torrential rain knocks fruit off coffee trees and can cause disease. "We expect the rains to be 50% to 70% higher than normal in some coffee-growing regions," said Maria Teresa Martinez, a meteorologist at Colombia's Hydrology, Meteorology and Environmental Studies Institute. Mike Halpert, deputy director of the U.S. National Oceanic and Atmospheric Administration's Climate Prediction Center, said it is too early to tell how long or how severe La Nina will be. "At this time, we see it lasting until early 2012," he said. This could push up global coffee prices. "We believe coffee may be the best commodity to exploit a developing La Nina phenomenon," said Deutsche Bank in a note Tuesday, adding: "We would only enter this trade closer to the end of the year on the assumption that risk aversion had moderated and that the La Nina phenomenon had strengthened to more convincing levels." Brazilian sugar production is also at risk of dry weather, since a lack of rainfall makes it more difficult to plant new crop and lowers the quality of cane already in the ground. "It slows the development of the cane," said Michael McDougall, a senior vice president at brokerage Newedge. "If it stays dry, no matter how dry, you might have to replant." -By Leslie Josephs, Dow Jones Newswires; 212-416-4055; leslie.josephs@dowjones.com http://www.insidefutures.com/article/321769/Sugar%20Futures%20set%2 0to%20Fall.html Sugar Futures set to Fall Friday, September 23, 2011 by Andy Waldock of Commodity & Derivative Advisors

The Sugar market is one of the most volatile commodity markets. Sugar has made four moves of plus or minus more than 50% since the beginning of 2010. Sugar touched .36 cents per pound this February. This was the highest sugar futures have been since 1980 when they reached nearly .45 cents per pound. Currently, October sugar futures are around .28 cents. I believe the

fundamental supply factors in this market are set to drive sugar down to a more normal valuation around .16 cents. Sugar prices have generally rallied this summer based on four primary factors. First of all, there have been logistical issues in Brazil's harbors. Brazil is responsible for nearly half of the world's sugar production. Brazil is also a major exporter of soybeans, cattle and other agricultural goods. In fact, agriculture is responsible for 20% of their labor force compared to less than 1% here in the U.S. Major snafus in the harbor construction projects currently under way caused delivery tightness in the March sugar contract and contributed to the market's peak in February. The second primary contributor to sugar's rally has been the refining spread. This is the difference between the price at which raw sugar can be purchased and the refined sugar can be sold. This spread advanced to more than $160 per ton which, attracted significant sugar purchases for delivery to refiners. This is similar to the temporary conditions we discussed in February of the crude oil crack spread that drove gas prices higher even as the price of crude oil declined. The competition for sugar delivery also made its way into the ethanol market. The sugar based ethanol production of Brazil and other countries is far more efficient than the corn based ethanol industry in place here in the U.S. However, just like here in the U.S. food based ethanol production pits the forces of hunger and fuel against each other. Therefore, rising crop prices coupled with rising fuel prices combine to tax individual households and define the upper boundaries consumer demand. The final push in upward sugar prices is more persistent. The growth in the economic viability of developing third world countries has led to increased sugar consumption. Better food and a more varied diet are typically the first splurges for a rising standard of living. The growth of purchasing power overseas will continue to fuel this trend and will place a higher floor on sugar futures prices in the years to come. World sugar production is always volatile. Over the last 20 years, the annual surplus or deficit between sugar consumption and demand has been split nearly 50/50 on an annual basis. This year it looks like there will be a significant sugar production surplus. Reports from Thailand, India, Brazil, Europe and Russia look very favorably towards large harvests. The shipping issues in Brazil have been figured out and they are also reviewing the possibility of cutting back ethanol subsidies. Furthermore, the market inefficiency of the refining spread has been fully exploited and is now back to normal levels. Thus, the supply side of the sugar market looks bountiful. Technically, the remaining long positions appear to be held by small traders and Commodity Index Traders while commercial traders are actively selling their forward production at these prices. This leaves the market susceptible to a sell off as CIT's and small speculators will exit their long positions as the market turns negative. Finally, I expect the market to ultimately test its fundamental uptrend around .16 cents. This represents a value target in line with the global population growth and consumption patterns.
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