Cyclone Yasi has hit Australia and the extent of damage to sugar cane crops will shortly become evident. India’s export situation also adds to uncertainty concerning supply. With the cyclone hitting Queensland, Australia and the potential for crop devastation, it may be advisable that India makes an announcement sooner rather than later concerning its plans for sugar exports to ease the market a little and avoid unnecessary price spikes.
Already some market forecasts on the up side for the year have been exceeded and a bullish market may continue beyond the previously anticipated fall in prices during the spring. Nevertheless, high sugar prices, if not reversed with clearer supply data, will result in growers planting more cane to take advantage of higher available returns which in turn may help prices fall in due course later in the year. However, weather and other factors negatively impacting supply still have the potential to provide price support beyond the spring.
It is very much a game of wait and see on several fronts.
Raw sugar futures jumped to 30 year highs briefly rising above $36 per lb to close at 35.30. While white sugar futures soared to record highs of $857 per tonne to close at $844.50. Raw sugar futures (not necessarily near month) may be heading towards $40 resistance levels before not too long if supply concerns continue.