Worry About India Crop Rallies Sugar Prices By TOM SELLEN JULY 27, 2009, 1:40 P.M. ET
World sugar futures neared three-and-a-half-year highs Monday, continuing the market's bullish theme due to continued worries about the size of India's sugar crop.
Speculative fund buying took October world sugar contracts on the ICE Futures U.S. exchange to a session top of 18.57 cents a pound, its highest price since February 2006. However, some market participants took the opportunity to book profits, nudging prices slightly lower.
An Indian youth carried a pot as he walked across the dried-out bed of Upper Lake, Asia's largest artificial lake, west of Madhya Pradesh state capital Bhopal in May. A dry monsoon season has boosted sugar prices. Continued worries over India's 2009-10 sugar crop, because of an unusually dry start to the annual monsoon season, coupled with expectations for strong demand are bolstering prices, analysts said.
"It's the same bullish story from India, except that they have had some monsoonal rains in the past week, which may save some of their crop," said Jimmy Tintle, analyst at TransWorld Futures.
India experienced its driest June in 83 years, and four of its 28 provinces have declared drought. Now it is a waiting game to see if the rains, while later than normal, will salvage most of the sugar crop.
India is the second-largest sugar producer in the world and is the largest consumer of sugar. The country is expected to face back-to-back production shortfalls, thus increasing imports.
