Bloomberg.com: Latin America
No matter what happens in the global economy, sugar demand is about to top production for the first time since 2006, the year prices reached a 24-year peak.
India, the second-biggest grower, will reduce supplies 16 percent next year, shifting to more profitable crops. Brazil, the largest producer, expects to use 57 percent of its cane for ethanol this year, up from 54 percent. Refiners in Europe will process 15 percent less because a 2004 trade ruling bars growers from exporting surpluses.
“The fundamentals for next year are better than in the last 12 months and are the best for market values in the last three seasons,” said Sergey Gudoshnikov, a senior economist for the London-based International Sugar Organization, which represents countries producing 82 percent of the world’s sugar.
The shortfall may make sugar one of the only commodities to continue rallying even as the slowing global economy reduces demand for raw materials from aluminum to oil. Sugar use isn’t affected by price swings in developed countries, while people are eating more sweeteners in China and India, the largest consumer, according to London-based ED&F Man Holdings Ltd.
Sugar on ICE Futures U.S. in New York may jump 28 percent to 18 cents a pound next year from 14.06 cents on Sept. 12, said analyst Jonathan Kingsman in Lausanne, Switzerland, whose firm Kingsman SA advises banks, hedge funds and Fortune 500 companies on commodity purchases. Kona Haque, a commodity strategist at Macquarie Bank Ltd. in London, said the price may reach 20 cents, and Jean Bourlot, a managing director and head of agricultural trading at Morgan Stanley, said it may double in 18 months.
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Reuters
India’s imports of vegetable oils jumped 21 percent in August from a year ago due to higher consumption in an expanding economy, and purchases in the oil year to October are seen rising 9 percent, a trade body said.
Imports ticked up from the previous month as domestic oilseed stocks were whittled away as the end of the oil year nears.
India shipped in 622,813 tonnes of vegetable oils, which includes vanaspati or hydrogenated oil, in August, up from 515,972 tonnes in the same month of 2007, the Solvent Extractors’ Association (SEA) of India said in statement.
Imports in the first 10 months of the oil year that began in November 2007 were 4.76 million tonnes, against 4.29 million tonnes a year ago, and would rise to 6 million tonnes in the full year, the statement said.
“Rising imports in the fag-end of the year are common as there are not enough seeds to crush,” said B.V Mehta, executive director of the SEA.
Indian farmers will harvest the soybean crop from next month.
India imports almost half of its annual domestic vegetable oil consumption of around 11 million tonnes.
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