AUSTRALIA: CSR Sugar sees 2010 market finely balanced
Published: 03/03/2010, 9:30:29 AM
Supply and demand in the global raw sugar market will be finely balanced through 2010, and any shock to production--particularly in major producers Brazil or India--will push prices higher, according to Dow Jones.
Based on the current outlook, the global market will likely deliver a "slight surplus" in 2010, CSR Sugar CEO Ian Glasson told Dow Jones Newswires, noting that global stocks have so far been sharply drawn down.
"The market is hand-to-mouth at the moment," and any major news either way will spook it, he said.
"Long run, clearly the price isn't sustainable at these levels, and it will drop down close to Brazil's cost of production, but it is on a knife edge," Glasson said, adding that a large cane crop in Brazil would probably push sugar prices lower, but any disruption in Brazil would result in higher prices.
More than half of globally traded sugar comes from within a 1,000-kilometer radius around the Brazilian capital of Sao Paulo, which renders the market "hugely susceptible" to a weather event, he said, adding that India, too, is a "huge variable."
With average global production this year, sugar could trade in a 15 to 20 US.-cent-a-pound range, but if the market is in short supply then "it will be 20 to 30 (cents), I suspect," he said, pointing to Tuesday's movements of ICE Futures US world raw sugar futures as an indication of how the market might respond to suggestions of a supply disruption.