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jrsiajdranch
Veteran Advisor

Sugar?

I like reading commentary from other countries as they give a lot of info a context we don't often think about.

One of my favorite over the pond publications is Agrimoney Her is an article on sugar that is intersting.

 

Why?  Sugar is corns number one competitor for ethonal and with corn being more expensive now that sugar or at lest nearly equal maybe we need to be looking at sugar for the direction in the corn market?

 

Here is the article:

 

Sugar extends losses, as EU exports hit raw nerve

Sugar extended its losses on Friday, dipping at one point 17% below the 29-year high set in the last session, as a selling wave blamed on Europe's announcement of exports continued.

New York's March raw sugar contract, which on Thursday touched 33.39 cents a pound, the highest for a near-term contract since January 1981, fell back to 27.61 cents a pound in early deals on Friday.

The tumble has been broadly attributed to the European Union's decision to permit a further 350,000 tonnes of sugar exports in the year to next September, although there are some questions over whether the size of the subsequent fall in prices appears an overreaction.

"I don't think it is big enough news on its own to account for the extent of the fall we have seen in prices," Jake Weatherall at Rabobank told Agrimoney.com.

"But a decline is not surprising, given the inflated levels we have seen reached."

'Psychological impact'

At Macquarie, Kona Haque said that the EU's move may have triggered flashbacks to Brussels' "very much unexpected" release early in the year of a further 500,000 tonnes of sugar for export, a decision viewed as contributing to a spring correction in prices.

Thursday's announcement "may have had a psychological impact", she said.

"Everyone is still very nervous about prices where they are at the moment. People may be deciding to take profits while they can," she added.

However, the decline did not necessarily mean an end to high sugar prices.

"I do not think the trend has been broken," Ms Haque said.

With Brazil's crushing season nearly over, and Indian and Thai supplies yet to come onstream, "right now, there is more import demand than export availability".

Key decision

Much of the future course of prices is expected to rest on a decision expected later this month by India, the second ranked producer of sugar, and top consumer, on the level of exports it will allow.

The country has expected to return to surplus in sugar this season, with output of up to 28m tonnes, following two years of deficits which have been a major factor in driving higher prices.

New York's March raw sugar contract stood 4.4% lower at 28.35 cents at 10:30 GMT.

In London, the near-term December white sugar lot slid 6.9% to $742.70 a tonne.



Related Agrimoney articles
Cosan caution fails to prevent sugar price tumble

 

Any thoughts?  I also read somewhere that in California they are building a ethonal plant for sugar cane.  Wouldn't that be intersting?

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4 Replies
4wd
Senior Contributor

Re: Sugar?

I don't know enough about sugar cane ethanol to make an intelligent comment, other than one needs to look at the whole complete picture of ethanol production corn vs sugar cane including the value of the by-products such as DDG's, and the availiability of the raw commodity (corn or cane)  being used in the mfg process. What are the by-products of sugar cane ethanol? Who in Iowa grows sugar cane?

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GoredHusker
Senior Contributor

Re: Sugar?

There really are no by-products of sugar cane as the plant tissue left over after the sugar is extracted is burnt to heat the boiler.  This is what makes sugar cane ethanol so much  more efficient than corn based ethanol.  A lot of people forget about the amount of natural gas needed to make corn based ethanol with regards to fuelling the boiler as well as fuelling the dryer to make the DDG's.  While natural gas right now really isn't very expensive, it has been in the recent past considerably higher priced. 

 

While I highly doubt anyone in Iowa grows sugar cane, we do have comparable substitutes that could be used.  I read an article one time that stated the sweet sorghum we currently grow for hay around here would be roughly 70% as efficient as sugar cane in South America.  While 70% isn't great, it is better than corn which is 30-40% as efficient. 

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jrsiajdranch
Veteran Advisor

Re: Sugar?

Sugar moved off it's high to be down about 20% on the week most commodities got hammered.  Was this just a throat clearing or is it something worse?

I so not know if it is China or the PIIGS.  I do not know if it is dollar mvement or gold?  I do think it could be alot of fodder for internet forums though!

Have some extra sugar on that cereal this morning it is cheaper. JR

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JRfrom OR
Frequent Contributor

Re: Sugar?

Still, the thousand pound gorilla in the room is oil.  It's at the center of the universe for us.

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