Raw sugar may climb 19 percent by March if dry weather in Brazil, the world’s biggest producer, persists, amid growing demand from countries including China, according to broker Newedge USA.
The price may reach as high as 35 cents a pound, Michael McDougall, a senior vice president at Newedge, said in a phone interview from New York yesterday. A rally to that level will make the commodity the most expensive since November 1980.
Raw sugar in New York has more than doubled since reaching a 13-month low on May 7 on concern adverse weather will reduce output in Brazil, Russia, China and Pakistan. The market needs supplies from India, the second-biggest producer, to meet a deficit, McDougall said.
“If there’s less rain than normal in Brazil until March you could potentially see a reduction in the cane harvest and then you have a potentially big problem,” he said. McDougall in August correctly forecast that sugar will exceed 23 cents.
Futures rose for a fourth straight session yesterday amid speculation that India may curb exports as it builds stockpiles. Raw sugar for March delivery climbed 1.1 percent to settle at 29.45 cents ICE Futures U.S.
“Current prices show that the market needs Indian sugar,” McDougall said.
Here's a chart of monthly prices from Barchart.com. Notice that prices are near 10-year highs
