Sugar futures may rise as a La Nina weather pattern brings excessive rain to India, delaying the cane harvest, according to a survey.
Nine of 11 traders, analysts and brokers surveyed by Bloomberg News said raw sugar traded in New York will advance next week. Two predicted that prices will fall. Raw sugar rose 0.3 percent to 28.45 cents a pound yesterday on ICE Futures U.S. in New York, gaining for the seventh time in eight sessions.
“You’re still looking at weather issues with La Nina slowing the Indian harvest, ” which usually runs until April or May, Michael McDougall, a senior vice president at Newedge USA in New York, said in a telephone interview. La Nina is a global weather pattern caused by cooling equatorial waters in the Pacific Ocean.
Prices have more than doubled since reaching a 13-month low in May, partly on concern that supply from Brazil and India, the two biggest growers, won’t meet demand.
Output in Maharashtra, India’s largest producer of refined sugar, has fallen 10 percent in the season that began Oct. 1 after heavy rainfall in the main growing areas slowed harvests, Prakash Naiknavare, the managing director of the Maharashtra State Cooperative Sugar Factories Federation Ltd., said this week.
“The other big question is India’s export policy,” McDougall said. India may allow 1.5 million to 2 million metric tons of exports this year, Vivek Saraogi, the president of the Indian Sugar Mills Association, said on Nov. 30. The nation will decide on easing export curbs in the third week of December, according to Farm Minister Sharad Pawar.
Nine of 11 survey respondents said white sugar traded on London’s Liffe exchange will gain and two forecast a decline. Yesterday, refined sugar rose as much as 1.6 percent to $737.10 a ton on NYSE Liffe, the highest level since Nov. 11.
White sugar’s premium over raw sweetener will most likely widen, according to seven of 11 people surveyed. One estimated it will narrow and three predicted little change.
In the attached chart, red bars are derived by subtracting bearish forecasts from bullish estimates for raw sugar, with readings above zero signaling that most respondents expect higher prices. The green line shows raw-sugar prices, and the blue line shows white sugar.
Bullish on raw sugar: 9 Bearish: 2 Neutral: 0 Bullish on refined sugar: 9 Bearish: 2 Neutral: 0 Widening refined premium: 7 Narrow: 1 Neutral: 3
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