Commodity Blog

Archive for July 15th, 2010

Sugar prices tend to be unpredictable, as they demonstrated at the first half of this year, slumping dramatically instead of rising, as traders expected. Recently the prices showed signs of some recovery, though. So, where do we stand now, what can we expect? In fact, sugar prices again show unpredictability as analysts provide completely different opinions on this matter. Such turn of event isn’t surprising, as the prices very dependent on weather, which itself quite hard to predict.

On the positive side, we had dry weather in June, import levy in India and outlook for stable demand. Drought might damage crops in Thailand, reducing yield by 10–15 percent. Some experts say that adverse weather may harm next-year harvest in Brazil too. Even in case of big harvest, Brazil may experience problems with delivering it to foreign importers, as it’s currently unable to load sugar on all ships waiting in ports. India may impose 40 percent tax on imports, supporting the price. India may actually keep its supplies from global markets to meet the local demand.

On the negative side, outlook for growing supplies makes it unlikely for sugar price to rise significantly. Indian tax, while supportive for the price, unlikely to boost it higher than current level. India expected to produce about 26 million metric tons of the sweetener, from which around 500,000 tons might be exported. Forecast for Brazilian harvest for the most part shifted from promising lower supplies to predicting higher output. Brazil’s output may climb 14 percent to as high as 41 million tons. Economists say that global deficit would shift to surplus of about 5 million tons in the next season.

All in all, there is no reason to expect major upswing of sugar prices. The prices expected to remain for the most part in the $0.15-$0.18 range. Price of $0.13 can be considered a good buying opportunity.

Coffee price jumped today as the weak dollar increased appeal of some commodities. The greenback slid 1 percent against the basket of six major currencies today. Analysts say that in case the futures would break the $1.70 level, the price would go up. September delivery for Arabica coffee gained $0.037 (2.2 percent) to $1.686 per pound as of 9:28 on ICE Futures U.S. in New York.

Cattle futures extended this month’s rally, climbing today to the highest level in eight weeks, on forecast that demand for beef exports from the U.S. would increase after the dollar dropped. Beef exports from the U.S. rose as much as 27 percent in May to 203.55 million pounds compared to 160.46 million in the previous year. October futures for cattle delivery rose $0.00375 (0.4 percent) to $0.93775 per pound by 10:59 on CME.

Latest commodity prices (ICE, NYMEX, CME) as of 15:47 GMT:

Oil (Brent) — $75.48
Gold — $1,210.78
Silver — $18.30
Palladium — $466.50
Platinum — $1,524.53
Copper — $6,675.00
Aluminum — $2.019.00
Nickel — $19,360.00
Zinc — $1,810.00
Cocoa — $3,145.00
Sugar — $17.32
Corn — $392.25
Soybean — $1012.25