SUGAR prices may rise to a 24-year high in 2006 as Brazil, the world's biggest producer, uses more of its crop to make automotive fuels and demand for sweeteners rebounds in the United States.
Sugar may hit 24-year high on US, Brazil consumption
2006-01-17 Beijing Time
SUGAR prices may rise to a 24-year high in 2006 as Brazil, the world's biggest producer, uses more of its crop to make automotive fuels and demand for sweeteners rebounds in the United States.
Raw sugar will average 14.74 US cents a pound on the New York Board of Trade this year, up from 10.03 cents in 2005, based on the median estimate of 17 traders, analysts and buyers surveyed by Bloomberg. Prices probably will touch 18 cents or more, the highest since 1981, a majority of respondents said.
Brazil is converting more sugar into ethanol fuel after gasoline prices jumped to a record. A drought in Thailand, once the world's second-biggest exporter, and the prospect of reduced European Union exports are adding to the supply squeeze, raising costs for companies including cereal maker Kellogg Co and Coca-Cola Co, the world's largest producer of soft drinks.
"The market's got legs, no question about it," said Edward Makin, chief executive officer of the Rogers Sugar Income Trust, a Montreal-based company that controls Canada's biggest sugar-refining group. "I don't know if we'll see 25 cents, but I'm hearing lots of people talk 20 cents."
White, or refined, sugar prices, which averaged US$279.09 a metric ton in London last year, will trade between US$300.50 and US$532.80 this year and average US$407.50, the Bloomberg survey shows. Prices jumped 37 percent last year.
While crude oil prices made headlines in 2005, New York sugar futures jumped 62 percent, second only to a 94 percent surge in natural gas. Sugar's gain accelerated late last year after the United States increased imports because of damage to domestic crops and refineries from hurricanes Katrina and Rita.
"The US is importing more because of the hurricanes, and that clearly is new-found consumption that hadn't been expected," said Mark Flegenheimer, president and chief executive officer of Michigan-based Michigan Sugar Co, which sells about 400,000 metric tons of refined sugar a year to foodmakers.
US sugar consumption in the season that started in October 2005 probably will rise to 9.1 million metric tons, the highest in five years, the US Department of Agriculture said. |
