Raw sugar traded in NY and White sugar in London both trade near a decade high on persistent worries about tight global supplies
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Recently FXMAG team has drawn its attention to rally sugar prices wondering what's behind significant gains. We asked Ole Hansen from Saxo Bank to comment on this soft commodity.
FXMAG.COM: Could you please comment on the price rally in sugar contracts that has been ongoing since autumn 2022?
Ole Hansen (Saxo Bank): Raw sugar (24.30 cents/lb) traded in NY and White sugar ($675/tons) in London both trade near a decade high on persistent worries about tight global supplies. Futures have surged higher on a combination of momentum buying from funds, demand for sugar canes towards biofuel production after OPEC+ cut production.
Most important being the risk of lower exports out of India and concerns about production in other key growing countries, such as Pakistan and Thailand
Ole Hansen (Saxo Bank): Most important being the risk of lower exports out of India and concerns about production in other key growing countries, such as Pakistan and Thailand. In addition, the May White sugar contract, last at $698 a ton has seen a major short squeeze ahead of Friday's contract expiry as traders holding short positions without physical supplies to deliver need to close out their short positions before expiry. However, following Friday's expiry we may see some consolidation, not least considering the price of both futures markets have entered into overbought territory.
