Tag Archives: raw sugar

Thailand sugar crop larger than expected

Thailand is forecast to produce approximately 7.8 million tonnes of sugar during the 2010/11 season.  Initial forecasts were for 6.8 million tonnes.  Crushing will end next month in Thailand, the world’s second largest sugar exporter after Brazil.

A larger crop in Thailand and expected decreased demand from Japan has seen prices drop recently.  China and Indonesia may step in to fulfil their buying requirements at such price levels.

Thai whites were offered at a premium $25 above London No. 5 which is down from the recent $40 premium. While Thai raws were offered at a premium of 200 points above New York No. 11 which is down from the recent 280 point premium.  Demand seemed to be weak for Thai raws of Japanese specification.  Thai premiums may weaken further as a result of the larger than expected crop, weaker demand from Japan and the possibility of Indian exports becoming available.

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Earthquake damages sugar refineries

Following the earthquake last week sugar refining in Japan is now focused in the west of the country away from affected regions. Two refineries were damaged in Chiba.  Although the damage is thought to not have been too serious.

Japan has 12 sugar refineries and imports approximately 1.5 million tonnes of raw sugar per annum.  Domestic raw sugar output is approximately 650,000 tonnes.  Japan makes up approximately 1.5% of global consumption.  Thai sugar for the Japanese market was not being offered following the earthquake.

Efforts are ongoing in Japan to cool two nuclear reactors with water.

 

Delays at the port of Paranagua, Brazil

The railway that transports softs to Brazil’s second  port of Paranagua has reopened at a time when the main roads to the port are closed following heavy rains that damaged bridges, roads and railways in the area.   The America Latina Logistica railway is now operational beyond the Serra do Mar Mountains and the area leading to the port.

Trucks are in a line up some 50 km from the port and movement is restricted and slow.  Most of the highway was damaged due to heavy rains and mudslides.  Traffic in both directions is now proceeding with delays on one of the four lanes.

Naturally, there will be delays experienced in shipments from Paranagua.  The repairs required for the highway to be reopened and become fully functional may last three months.

Sugar prices shaken by earthquake

ICE raw sugar futures slid by over 7% to 25.65 cents per lb, the lowest this year on selling following the Japan earthquake and nuclear fears.  This is some way off recent 30 year highs.  Demand is likely to be impacted in the world’s third largest economy.  Meanwhile May white sugar also fell $39.70 to $667.10 per tonne.  The fall in prices which has little to do with the valuation of sugar may pave the way for physical buyers to step in.

 

Brazil’s cane crop to increase by 20 million tonnes in 2011/12

The International Sugar Organization is forecasting Brazil’s cane crop to increase by 20 million tonnes in 2011/12 to 640 million tonnes.  While sugar output in the Centre South region is expected to rise by 2 million tonnes to 36.5 million tonnes.

 

Russian raw sugar imports down in February despite bad beet harvest

Imported raw cane sugar to Russian refineries dropped in February relative to 2010 in anticipation of the cut in duty on imported sugar says the Russian Sugar Producers Union. In late 2010 import of raw sugar by Russian refineries had been up following a bad beet harvest. The bad harvest was due to drought.

Sugar refineries in Russia refine beet sugar during the beet season and then once the beet season is over, in February, refine cane sugar.

No more 10% falls in less than a minute for No.11 sugar futures

In early February raw sugar futures prices on ICE fell by just under 10% in less than a minute.  Such trades will not be possible from 1 March 2011 when ICE is to reintroduce its implied matching engine.

The change will become effective when ICE’s implied matching engine resumes.  It is not yet clear what ‘acceptable trading ranges’ and ‘acceptable volatility’ means.

The implied matching engine uses an available bid to generate a spread quote which mathematically irons out the possibility of extreme price deviations. Thereby ensuring, in most cases, a correlation between different contracts and preserving the spread differential.

Not the best news for algorithmic traders.  Another proposal is the introduction of circuit breakers to prevent extreme price spikes.  ICE is consulting on the idea.