Global appetite for candy is tightening the sugar market

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(Bloomberg) – The world is turning back to sweets and desserts as lockdowns loosen, especially in emerging countries, and this is causing the prices of refined sugar supplies to skyrocket in the near term.

Nations from Pakistan to Sudan are buying in world markets again after a long period of absence. This is tightening supply and recently drove the December white sugar contract in London at a record premium to March futures.

Sugar prices are trading near a four-year high after frosts and drought hit production in Brazil, the largest producer, and uncertainty surrounding Indian exports. Higher costs to secure short-term supplies could add to global concerns about food inflation following other rallies in agricultural commodities, from wheat to coffee.

“We believe there is a rebound in demand materializing in the London market,” Wilmar International Ltd. chief analyst Karim Salamon told the S&P European sugar conference on Tuesday. Global Platts, citing spreads.

White sugar for December delivery was trading at $ 501.30 a tonne in London on Wednesday. Its March futures premium was $ 6.60 and hit $ 9.40 on Monday, the highest since the spread began.

In recent weeks, refined sugar has outperformed crude futures in New York, where prices have come under pressure in part due to improving prospects for Brazilian production.

Emerging markets have suffered from tight credit, so now “these markets are slowly coming back, in part because their stocks have been depleted and they need it,” said Kona Haque, head of commodities research. at ED&F Man, during the conference. .

Europe is another importer with renewed demand for sugar after the lockdown.

The EU is “absorbing the recovery of the world market” and local prices rise to match those of imports, said Daniel Kerkhof, president of the European Association of Sugar Traders.

(Updates with variances and price from fifth paragraph. An earlier version corrected Analyst Wilmar’s name in fourth paragraph.)

© 2021 Bloomberg LP

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