Bloomberg News

White-Sugar Premium May Fall 39% on European, Indian Supplies

October 10, 2011

Oct. 10 (Bloomberg) -- White sugar’s premium over raw sweetener may fall as much as 39 percent by the end of the year as European, Indian, Thai and Central American production surges, according to Swiss Sugar Brokers.

White, or refined, sugar for March delivery on NYSE Liffe in London was $81.7623 a metric ton more expensive by 2:37 p.m. local time than the March raw-sugar contract on ICE Futures U.S. in New York, data on Bloomberg showed. The premium may fall to $50 to $60 a ton by the end of the year, Naim Beydoun, a broker at Rolle, Switzerland-based Swiss Sugar Brokers, said by e-mail in response to questions today.

“The white premium is already showing some sign of fatigue hanging close to the $100 level and will ultimately be weighed not only from the Indian supply, but also from the EU export quotas, Russia, Thai whites and Centrals,” Beydoun wrote in a report e-mailed yesterday.

Cane production in Thailand, the world’s second-largest sugar exporter, may climb to 100 million tons, setting a record for a second year, according to Thai Sugar Millers Corp. Output in India, the second-largest producer after Brazil, will rise to 26.2 million tons in the 2011-12 season and exports may total 3 million to 4 million tons, Sucden, the trading arm of Sucres et Denrees SA, estimates.

European Union sugar production is expected to exceed 18 million tons this year, up from 15.4 million tons in 2010 and 17.5 million tons in 2009, French crops office FranceAgriMer said Sept. 30. Russia’s sugar output from beets is expected to be 4.5 million to 5 million tons this marketing year, according to First Deputy Prime Minister Viktor Zubkov.

Global sugar output will exceed demand by 4.2 million tons in the marketing year that started this month, the International Sugar Organization estimated. Raw-sugar exports will likely fall 782,000 tons to 31.3 million tons as shipments of refined sugar gain 1.1 million tons to 20.9 million tons, it said.

--Editors: Dan Weeks, John Deane.

To contact the reporter on this story: Isis Almeida in London at ialmeida3@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.


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