What does 2017 hold for sugar futures?


Sugar futures have been one of the strong performers in 2016, but momentum has cooled in recent months.

Commentators give their views for the year to come.


The Brazilian sugar cane harvest will be a major factor, and so far forecasts are contradictory.

According to Datagro, for example, Center-South sugar production in 2017-18 should rise to 36.1 to 36.5m tonnes, from an estimated 34.1m this coming season.

Some 600m tonnes of sugar cane are expected to be processed, much in line with the last season.

However, the Brazilian sugar industry association Unica considers a decline in the sugar cane harvest for more likely, even in good weather conditions, because producers have invested too little in recent years in maintaining and upgrading their plantations.

[The] sugar market can be expected to remain sufficiently strained to justify prices close to 20 cents a pound.

We envisage a raw sugar price of 19 cents a pound in the last three months of 2017.

Society Generale

We maintain our neutral view on sugar for the near term despite the recent fall in prices.

The commodity has lost some of its shine amid renewed weakness in the Brazilian real and the failure of La Nina to develop further.

We reiterate that, in the absence of fresh supportive fundamental/weather news, sugar prices should continue to move in relation to the competitiveness of swing producer Brazil.

We keep our sugar price forecasts unchanged.

Barring any adverse weather, we believe the sugar market will post a surplus of 3.5m tonnes in 2017-18, vs a deficit of 2.6mt in 2016-17.

However, global stock-to-use should fall from 19.6% in 2016-17 to 18.9% in 2017-18, similar to the level in 2010-11, when sugar prices touched 35.31 cents a pound.

Society Generale saw prices for the last three months of 2017 averaging 19.50 cents a pound.

Focus Economics

The impressive rally in sugar prices since the start of the year seemed to reach its ceiling at 23.30 cents per pound in late September and has declined slowly but steadily since then.

Sugar traded at USD 21.0 cents per pound on 4 November. The price was down 6.5% from the same day last month, it was 40.4% higher on a year-to-date basis.

The price was up 46.3% from the same day last year.

This year's sugar price rally reflected slowing production in key producers, which is expected to cause a deficit in the sugar market.

The recent drop, however, revealed that market analysts are now focusing on a possible surplus in 2018, which has driven some speculators to exit the market.

Analysts expect prices to average 19.6 cents per pound in the last three months of 2017.


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