FOR IMMEDIATE RELEASE: August 7, 2017
CONTACT: Phillip Hayes, 202-271- 5734 (cell)
From the International Sweetener Symposium:
SAN DIEGO – “Bears remain firmly in the driving seat,” the executive director of the International Sugar Organization said today of the global sugar market.
Worldwide consumption growth has slowed at a time when production is up more than 12 million metric tons, Jose Orive explained at the International Sweetener Symposium, adding that world production could hit an all-time high in the coming year.
This comes after two years of deficits and higher prices in the global market, he said. Refined global prices hit 27 cents per pound last year, but are trading below 18 cents now.
Among the factors causing the market swing, according to Orive: “Boosted area under beet production in Europe; production recoveries in India and Thailand; and no huge weather shocks.”
Brazil’s crop is also off to a good start, and China, a large global sugar buyer, has curtailed raw sugar imports, he said.
As a result, “Funds sold heavily, and by May, had switched from a substantial net long position to a small net short position,” Orive noted.
Luther Markwart, the incoming chairman of the American Sugar Alliance, moderated the panel and explained that this kind of volatility on the global market is not that uncommon.
“The world dump market is prone to periods of shortages and peaks because it is largely comprised of leftover sugar that foreign producers heavily subsidize to ship abroad,” he said. “That makes the market unpredictable for buyers.”
Such subsidization and unreliability, he said, underscore the importance of U.S. sugar policy.
“We have some ups and downs, but America’s no-cost sugar policy helps round off the extremes and keeps things far more consistent,” Markwart said.
U.S. sugar policy is comprised of government-backed loans to producers, which are repaid with interest, and tariffs that keep unneeded subsidized imports from flooding the market and driving domestic producers out of business. Today’s sugar price in America is as low as it was back in the 1980s and 1990s.