Suedzucker hikes profits hopes - even as sugar futures soar anew

22.09.2016

Suedzucker hiked its forecast for full-year profits, citing higher sugar prices – even as futures in the sweetener soared anew, jumping above $600 a tonne in London for the first time in four years.

The German-based group, Europe's largest sugar refiner, raised to E340m-390m, from E250m-350m, its forecast for operating profits for the year to the end of February – implying a jump of at least 41% from the E241m achieved last year.

Suedzucker, also reporting a 28% jump to E99m in operating profits for the June-to-August period, said that the improvement reflected in part "ongoing positive performance" in its special products division, whose operations include grain processing into starch and ethanol.

However, it said that its improved earnings performance was "caused especially by the development in the sugar segment", with the group expecting a further benefit ahead from revived prices of the sweetener, as contract renewals come due.

"A sugar price increase is expected as of October 1," the start of the 2016-17 sugar marketing year.

Shares, futures soar

The comments - which drove Suedzucker shares 5.5% higher to E25.15 in early deals in Frankfurt, a level not seen since July 2013 – came even as sugar futures soared anew.

Raw sugar futures for October touched 23.45 cents a pound in New York, the highest for a spot contract since July 2012, before easing back to 23.15 cents a pound, a gain of 4.3% on the day.

London white sugar futures for December hit $611.70 a tonne, the highest for a spot contract since August 2012, before retreating to $607.00 a tonne, a rise of 2.8%.

Real help

The sugar price gains were attributed in part to a recovery in the Brazilian real, which soared 1.6% against the dollar on Wednesday after the US Federal Reserve held interest rates, rather than increasing them as many investors had expected.

A rising real boosts the value in dollar terms of assets, such as sugar, in which Brazil is a major force.

Indeed, New York arabica coffee futures for December rose 2.0% to 159.75 cents a pound in early deals.

However, customs data on Chinese sugar imports were well received too, showing buy-ins of 360,285 tonnes last month, a jump of 31% year on year.

That contrasted with the declining trend seen earlier in 2016. Indeed, Chinese sugar imports in the January-to-August period remain, at 2.11m tonnes, down 31% year on year.


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