Sugar’s surge in the last six months is justified by the market’s fundamentals, said Alain Jeanroy, director general of the French sugar-beet growers’ federation.
The Standard & Poor’s GSCI Sugar Index has doubled since the end of May as rains cut harvests in Brazil and India, the world’s two biggest producers. Output is “more and more likely” to fall behind consumption this year, the Confederation Generale des Planteurs de Betteraves said today in a presentation in Paris.
“We had expected to rebuild stocks, and in the end, that’s not going to happen,” Jeanroy said at the presentation. “That’s why prices continue to be high. It’s really the fundamentals that justify the sugar price.”
Raw sugar traded on ICE Futures U.S. in New York rose on Nov. 11 to 33.39 cents a pound, the highest price since 1981. White, or refined, sugar reached $811 a metric ton, the highest level since at least 1989, on the same day on NYSE Liffe in London.
World sugar prices may remain higher in the future than they’ve been historically, according to Jeanroy. Brazilian production costs are about 14 cents a pound, meaning it will “be difficult for the market to structurally drop below 14 to 15 cents,” he said.
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