Rabobank sees sugar rebounding in coming months
Published: 03/04/2010, 10:08:28 AM
Rabobank says sugar prices will likely rebound in coming months due to limited exportable supplies, and "a lot of volatility" is expected, according to Dow Jones.
"Fundamentals continue to indicate tight market conditions ahead," and many exporters have run stocks down to low levels, analyst Andy Duff said in the report.
"With the market having fallen so far and so fast, but long-term fundamentals resolutely tight, it is by no means certain that the price action will be downhill all the way during the coming months," Duff said.
The benchmark ICE raw sugar futures contract has fallen by more than 20% since the beginning of February.
"The extent to which changes in the fundamentals of the sugar market were behind this turbulence appears limited," Duff said, attributing the price tumble to heavy speculative selling, as was indicated in data provided by the Commitment of Traders reports.
Price volatility will likely continue in the coming months, Duff said, noting that the early progress of the new crop in Brazil, the world's largest supplier, would mostly set the market's tone.