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Commodities  |  October 11, 2010 12:23:18

ISO - monthly reports on the development of the sugar market in September 2010

On Friday afternoon, published by the International Organization for Sugar (ISO), its regular monthly report on the development of the sugar market for the month of September 2010, by which the recorded value growth at the highest level since February of this year, which was mainly the result of fundamentálnej situation on the supply side and the horn rezultujúceho inflows of speculative capital in the market. It is mainly about the situation in Brazil, top producer and exporter of sugar, where unusually persistent dry weather raised concerns about possible negative impact of the aging of cane, to which is added a crazy stop flooding and crop damage in Central America (Mexico), Pakistan, and some regions of India and also Australia.

Price of sugar goes slowly toward the north since the June / August, and this value was a reflection of the strengthening fundamentov particular, in the month of September, the situation changed when the said there was a surge of speculative capital, where there has been more than 40% growth in net him long positions of the funds (non-commercial investors).

Traders during September obracali their attention mainly on the development of the weather in Brazil, where the end of the month again started to rain and wet The said alleviate concerns about the crop. Well, on the other hand, just too dry in the preceding weeks, led to a revision of the estimates of new sugar cane crop in the commercial season 2010/2011 downwards (for example, U.S. Department of Agriculture says a 3.2% nominal decline compared with the expectation aprílovým).According to the Brazilian UNICE, however, despite the fact envisaged in the new fiscal year production high, about what they say and her current data, according to which sugar cane production in the main production area in central-southern part of the landscape to 16.septembru reached 417.2 million tonnes, by 19.5% over the past theater season, also increased the yield of sugar from sugar plants, and output is still at 25.13 million tonnes, which is by 31.8% year on year more.

In the meantime, also evolves promissingly sugar production in India, the second world top producer and consumer commodities najväčšom, despite concerns in the context of strong rain in the monsoon period ending in September.Many refineries in the main production region of Maharashtra have already begun to process the sugar cane crop for the new season and tamojšia production is expected in volume more than 9.1 million tons (in the past theater season has reached 7.1 million tonnes), the second largest region, Uttar Pradesh , allowing outputom 6.4 million tonnes. The local sugar refinery Association, said that in season 2010/2011 estimated the total production of landscapes at 25.5 million tonnes compared to 18.9 million tonnes in 2009/2010. Some estimates say also on the potential growth of the offer to 26 million tonnes. Malo would experience a surplus of production at 2.5 million tonnes, which will again become the land after two years exporter of commodities, the government for the next 3 months will allow for exportation of 250 000 tonnes, a further 700,000 tonnes, exports in the period November - March.In September the government also allowed the export of 350,000 tonnes of sugar previously dovozených which remained waiting in port for lack of means of transport and some representatives of sugar industry to assume the availability of land for export year 2010/2011 to a quantity of 3.5 million tonnes.
Adjacent to Pakistan because of the great flood to fight to producer shortage of 1.2 million tonnes while in order to satisfy domestic consumption government allowed the import of commodities to processors without having to pay 25% import duty.

Supply situation is precarious and in Thailand, the second top world exporter, where collisions due to inadequacy in the period June - August reduced the estimates for the output to 6 million tonnes. On the other hand, some local organizations to the production of higher-counted, in volume 7 - 7.2 million tonnes.

Problems also crop I beg Mexico and countries in Central America, where heavy rainfall months of destroying some of the sugar cane plantations and damaged key roads and bridges for transport of new crops. Mexican sugar cane growers association counts with a loss of 100 000 - 150 000 tonnes while the previous estimates calculated from record offices of production-more than 5.4 million tonnes. With the fall about 5% of offers counted only Guatemala and Honduras, in Nicaragua losses probably reach about 15%.

Regarding the assumptions on the evolution of the balance of the sugar market for the new season 2010/2011, many sugar sector umbrella organizations expect in excess of supply compared with a deficit in your ended the season recently. The figures below estimates udávajú some of them:
• ISO (August): 170.37 million tonnes of production, consumption of 167.15 million tons = 3.22 million tonnes of surplus
• Czarnikow (August): 172.17 million tonnes of production, consumption of 171.21 million tonnes of surplus = 0.96 million tonnes - a downward revision of assumptions júnových +2,45 million tons
• Abare (September): 172.30 million tonnes of production, consumption of 168.10 million tonnes of surplus = 4.20 million tonnes - an upward revision of assumptions júnových +3,80 million tons
• Kingsman SA - volume in excess of 3.2 million tonnes - a downward revision of assumptions júnových +5.2 million tons

If the expected price developments in the sugar market in the coming months, Goldman Sachs estimates for the next three months the average price of sugar at 20.00 pounds from the previous USD/100 USD/100 15.00 pounds, also increased their value assumptions for the next move half of the year to 16.00 pounds USD/100Predicted from previously USD/100 12.00 lbs. Australian Commonwealth Bank momentálny again considered for short-term price developments and the beginning of 2012 sugar prices expected to fall back to 12.00 USD/100 pounds, unless there are any difficulties with the crop and harvesting it in India. Australian ABARE sees another year for an average price of sugar on the surface USD/100 18.50 pounds, less than minuloročnému average 23.50 pounds USD/100 law pending the surplus supply on the market. Pursuant to LMC International Ltd.. sugar should be in the next 6 months, traded at the price from 20.00 to 25.00 USD/100 pound; Rabobank projected in the last quarter of this year, maintaining the value of commodities on the surface, on average, 20.00 lbs USD/100 in 1Q/2011 2Q/2011 and expects an average price to 22.00 respectively.USD/100 20.00 pounds, while warning against the possibility of decline in supplies from Brazil, where the country receives adequate rainfall in this season.

ISO plans to publish its first revision of the estimates for the development of the balance of the sugar in the season 2010/2011 in mid-November.
In the short term the price of sugar continues to rise in connection with the growing demand from countries affected by bad weather and crop losses (to the latest importérom as Pakistan, Russia, Mexico and South Africa also adds Iraq, which announced a tender for import of 200 000 tonnes sugar), which also showed Bloomberg survey between 10 analysts, traders and brokers, most of which builds on the growth of prices of commodities in this week.Also suggested by recent developments in the market today at noon when 100 pounds of sugar sold by the pound to 26.97 USD/100-resistance in perspective for 27.00 to 27.16 USD/100 pound, further to 27.50 - 27 USD/100 75 lbs.

Author: Vanda Zajacová (vanda.zajacova @ zoznam.sk)

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