World sugar market: Sugar remains strong despite macro turbulence

摘要

At the beginning of August sugar prices were pressured by the turbulence on the global stock market overriding growing concerns over the Brazilian crop. Assets of all classes lost value' due to predictions of slowing economic growth and growing dangers of an economic recession. Investors became increasingly risk averse seeking lower risk investments. This prompted funds to reduce their net long position in sugar, given the volatility of sugar prices and expectations of a healthy surplus in 2011/12. This situation did not persist for long and on 19 August raw sugar prices breached the 30 cents barrier given the gloomy outlook for Brazil's 2011/12 Centre/South (CS) crop. However, at the end of the month macroeconomic fears and expectations of more supply from Russia and Europe once again drove prices below 30 cents. Still, the front month raw sugar price in New York rose from 28.97 cents/lb at the beginning of the month to 29.66 cents on 25 August (Fig. 1). The October white sugar price increased slightly from $770 a t to $771.2. The ISA (International Sugar Agreement) average for August (1-25 August) on the other hand fell to 27.47 cents/lb from 28.22 cents the previous month but remained above the 18.51 cents seen in August 2010.