Commerzbank says sugar ready to jump
Published: 03/04/2010, 1:44:57 PM
Commerzbank says sugar prices are poised for a bounce, and may yet spike back towards 29-year highs, Commerzbank has said, even as Philippines joined other importers in raising doubts over buying intentions, according to Agrimoney.
The "somewhat surprising" 30% slide in sugar prices from last month's peak has "gone too far", a report from the German bank said, echoing other observers in blaming the slide on a technically based exit by speculators.
Supply and demand fundamentals pointed to a "persisting physical shortage" of sugar, the briefing said, noting that it had been less than a month since the International Sugar Organisation and sugar merchant Czanikow raised their estimates of the world deficit of the sweetener.
"Prices have reached such low levels that physical demand should pick up again," saying the New York price for raw sugar should average 25 cents a pound in the April-to-June period, with potential for crop scares bringing higher prices.
"Temporary price spikes back towards 30 cents [a pound] can't be ruled out."
The report came as the Philippines said it may hold or cancel a plan to import 134,000 tonnes of sugar, after the slump in world prices fed through into the domestic market.
"Why import if the prices have dropped locally?" Rafael Coscolluela, head of the Philippines' Sugar Regulatory Administration, told Reuters.
"Nobody wants to jump in and invest millions when you're not sure where the market will go."
The comments follow last month's failed Egyptian and Pakistani tenders which have been widely viewed as catalysing the slide in prices by provoking doubts over end demand.