Sugar price benefits from robust global demand and dryness in Thailand

Assessments of the drought in Thailand, the second most important sugar export country, show that the first sugar cane plants in the northeast of the country are already damaged.

Having fallen on Tuesday to its lowest level since January 2009, the sugar price managed to recover somewhat during the course of trading yesterday. 

For a time, the October contract for sugar gained by nearly 3.5%. By the close of trading the price was at 11.46 US cents per pound, constituting a daily gain of a not insignificant 2.6%.

Furthermore, the premium for white sugar as compared with raw sugar increased noticeably more sharply, which points to higher final demand. Market participants are confident that the demand forecasts for this year could be exceeded. 

"Besides growing demand, the El Niño weather phenomenon could also be lending further buoyancy to the sugar price", opines Commerzbank.