VAIL, COLO. —World raw sugar prices will continue to influence domestic sugar prices “as long as the status quo” in the market exists, said Jeffrey Dobrydney, senior vice president, head of futures and options, JSG Commodities, to attendees of the 37th International Sweeteners Symposium held August 1 in Vail.
“No. 11 will continue to influence the price of No. 16 as long as high-level imports are part of the US supply,” Dobrydney said. “Next year’s prices already indicate this.”
#11 refers to the ICE Futures US New York global raw sugar futures contract, while #16 refers to the ICE Futures US New York domestic raw sugar futures contract.
Mr Dobrydney said the “status quo” included the restriction of Mexican sugar exports to the United States under the suspension agreements, beet sugar production not meeting expectations, supply chain constraints. With nearby supply exacerbating price levels, reliance on year-end raw sugar import quota increases and increases domestic demand for sugar.
The main influences on world raw sugar prices include large monetary flows related in part to inflation, speculative fund positions, crude oil prices and the value of the Brazilian currency against the US dollar, a said Mr. Dobrydney. He noted that commodity futures are up 19% since the first of the year, but commodities (coffee, cocoa, sugar) are down 4.5% and sugar in particular 7. .5%. Hedge funds in global raw sugar futures have moved from a large net long position (prices are expected to rise) earlier in the year to the largest net short position (prices are expected to fall) since 2020. Brazil should increase its sugar production (while reducing sugar cane). -ethanol production) and India is expected to export a record amount of sugar in 2021-22.
High U.S. sugar prices and tight supplies have made high-level sugar imports profitable amid growing global sugar supplies and falling global raw sugar futures prices, Dobrydney said. .
Top tier sugar imports are those imported at levels above the low duty quota supplies. Peak imports in 2021-22 were estimated in July by the US Department of Agriculture at a record 278,000 tons. Mr. Dobrydney said the “calculations” for 2023 based on May 2023 futures contract No. at a landed price of 35.85¢ per pound. He expects the difference between the world price of raw sugar and the domestic price of raw sugar to remain around 18¢ to 19¢ per pound in 2023, which would continue to encourage high-level imports.