The World Sugar Market

AUGUST 2010

SUGAR

Although the global supply/demand balance has improved, stocks remain low in several countries. Nearby raw sugar futures have broken out of the 14 to 16 US cents/lb range of the past few months and the No.11 price (basis October) is currently over 18 cents/lb reflecting strong short term demand. Another recent factor has been the very large volume of sugar awaiting shipment from overstretched Brazilian ports.

Analysts seem united in predicting a record 2010/11 crop in Brazil with a Centre/South harvest of over 600 million tonnes cane. Meanwhile India is entering the 'upswing' stage of its cycle and production there is forecast at 23-25 Million tonnes. The figure will be partly monsoon dependent. Some analysts are now also predicting a global surplus of 2.5 million tonnes in 2010/11.

Meanwhile the white sugar price is holding up well in the context of low stocks and concerns over how nearby demand will be met prior to the start of the new crop later in the year. The London No. 5 white sugar price (basis October) now stands at over US$ 550/t and the nominal white premium remains high at around US$ 150/t. There is much activity in the destination refining sector.

Tate & Lyle has announced a deal to sell its sugar business to American Sugar Refining. The Group said the proceeds of the deal, which was widely expected, would be used to reduce its net debt levels. Tate & Lyle's sugar business consists of refineries in the UK and Portugal, as well as the Golden Syrup factory in London. The deal is expected to be completed within the next two months, the company said.