Sugar Prices Surge to New Highs

SIMON HOOD- WILMAR MANAGER GROWER MARKETING

THE last month has seen a surge in the #11 sugar futures contract, with new highs recorded for all contracts on the board.

This has catapulted the balance of the 2022 crop to a high of $775/t for growers who are still to finalise target pricing for last season.

A major beneficiary of the higher prices has been the Wilmar Production Risk Pool. As of the end of March, the forecast pool valuation was $709/t actual ($685/t IPS). This is an excellent result for growers who have chosen to use this marketing option for some or all of their crop.

For the upcoming 2023 season, prices are also making new highs, along with the 2024 and 2025 seasons. At the time of writing, the highest target price filled for 2023 was $690/t, $600/t for 2024 and $550/t for 2025.

We are getting a lot of enquiries from our growers about what is driving the price. Obviously, the physical market remains tight, with northern hemisphere crops cutting out a bit quicker than hoped and Brazil yet to fully come online.

Our forecasts have 22/23 season with a global supply and demand deficit of over 2 million tonnes of sugar. For the 23/24 season, we are currently projecting the trade flows to remain tight even with a massive Brazilian crop factored in.

The recent rise in the oil price and the decision by the Brazilian government to raise the tax rate on gasoline will underpin concerns for the sugar supply from the world’s largest exporter. A weaker AUD has also helped nudge prices higher.

Nevertheless, there is a market saying that high prices cure high prices. Growers need to asses where their current production costs are and whether the forward prices on offer make sense to provide certainty of income for their business.

Our marketing consultants are currently busy with growers finalising their pricing for the 2023 season. The deadline for nomination is April 28. There is a lot of fresh enquiry for our GMPRS product following excellent grower results this year.

For any queries, please contact your Herbert Grower Marketing Consultant Franco Zaini on 0419 476 770.