| World Sugar Stocks Remain Tight, Prices Strong |
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FOR IMMEDIATE RELEASE CONTACT: Phillip Hayes Monday, August 1, 2011 202-271-5734 (cell) From the International Sweetener Symposium: World Sugar Stocks Remain Tight, Prices Strong STOWE, Vt.¾Market experts told the 28thInternational Sweetener Symposium today that world sugar production is rising, but so is demand, meaningthe market will remain relatively tight. World sugar prices are hovering near 30-year highs, at about 31 cents per pound, for raw cane sugar. Stefan Uhlenbrock, of F.O. Licht in Ratzeburg, Germany, noted that crop problems in Brazil, which is the world’s leading sugar exporter, have boosted world prices by 10 cents per pound since May. “Strong prices of the past two years have inspired efforts to boost production, which should rise in the coming year,” Uhlenbrock said. “But prices may not drop as much as in the past when supply responded to high prices. Global demand for sugar has remained strong, and costs of production are much higher because of rising energy costs and scarcer credit.” Uhlenbrock said that sharply higher costs in Brazil, which now accounts for more than half of global sugar exports, suggest the volatile world market may not sink to past low levels again for some time. “Exacerbated by the strength in the Brazilian real, Brazilian costs of production have soared from single digit levels to around 17-18 cents per pound in just the past couple of years,” Uhlenbrock said. “There may be a new, much higher floor to world sugar prices,” which had dropped as low as 8 cents per pound as recently as 2007. Meanwhile, the strength of the world price is being reflected in the North American sugar market, according to Frank Jenkins, of the Jenkins Sugar Group in Wilton, Conn. “Since free trade with Mexico began in 2008, Mexico has been sending record amounts of sugar north, some years more than all the traditional 40 quota-holding countries combined would ordinarily send,” Jenkins, said. “But with world prices up, U.S. prices have been strong, despite the surge of imports from Mexico,” he explained. “The U.S. needed substantial additional foreign sugar this year and will almost certainly again next year, to ensure adequate supplies.” Jenkins noted that U.S. sugar consumption has been rising, largely at the expense of high fructose corn syrup, reflecting a shift in consumer preferences. Though the U.S. is the world’s fifth largest sugar producer, it is also the world’s second largest net importer of sugar. Under the no-cost U.S. sugar policy, the government allows additional imports when necessary to ensure adequate supplies. Commented panel moderator Jack Roney of the American Sugar Alliance, “Despite the tight world supplies and high prices, the U.S. sugar market has remained well supplied with high-quality safe sugar. It is a credit to efficient domestic producers and to U.S. sugar policy, which operates at no cost to taxpayers and is projected to continue to do so over the next 10 years at least.” -0- |
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