Futures Market News
Demand outlook, questions over Brazilian ports push sugar futures up
Jul 21, 2010 04:17 PM
A rise in the price of sugar futures is supported by both genuine increases in demand and some difficulties on the supply side, analysts say. In Wednesday trading, the No. 11 raw sugar futures contract for October delivery gained 1.538 percent to 17.55 cents per pound.
The Muslim world is approaching the peak of its sugar consumption, as producers scramble to meet demand for the candies and sweets which are consumed in vast quantities during nighttime Ramadan feasts.
Muslims abstain from eating or drinking during daylight hours for the month-long fast of Ramadan. After the sun sets, though, people celebrate with opulent feasts.
The surging demand has caused serious logistical issues at six important Brazilian sugar ports, which yesterday reported a total of 111 vessels delayed.
In addition, rising equity prices in Europe helped commodities and raw materials in general, lifting futures as traders predict higher prices down the road.
The Thai government is also buying up tens of thousands of tons of sugar as domestic stockpiles shrink. The government has imposed price controls on the retail price of sugar, which some say is giving domestic Thai sugar producers - who produce about 7 million metric tons per year - a strong incentive to sell their sweetener on global rather than domestic markets.
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