CBA sees continued sugar market tightness
Published: 02/08/2010, 12:04:05 PM
The Commonwealth Bank of Australia says the global sugar market will remain tight through 2010, helping to keep prices well above normal levels despite last week's slump, according to Dow Jones.
After hitting a three-decade high of more than 30 US cents a pound a week ago, the benchmark ICE Futures U.S. sugar contract fell 5.3% Friday, tracking sharp declines in crude oil and other commodities, while strong gains for the US dollar reinforced the bearish sentiment.
Price declines over the week were largely confined to the front end of the raw sugar futures curve, and were driven by faltering outside markets, mounting global risk aversion, speculation and fund liquidation as well as a lack of physical buying at high price levels, according to the bank's commodity strategist Luke Mathews.
Looking forward, Mathews said strong underlying demand exists--but not at 30 cents--and noted that the International Sugar Organization has signaled it will widen a global sugar deficit estimate in mid-February.
The bank didn't forecast prices.