CHINA: Buying fuels sugar price rebound
Published: 03/12/2010, 3:39:18 PM
Reports of buying by end users as China reportedly added itself to the list of buyers lured out by lower prices, encouraging investors to close bets on the market extending its 30% slump, according to Agrimoney.
White sugar jumped 4% in London in morning deals, with New York raw sugar adding 3% to come within an ace of retaking the market landmark of US$0.20 a pound.
The revivals followed reports that China had bought about 100,000 metric tonnes of sugar from Australia.
While China, the world's third-biggest sugar consumer, had been expected to rebuild state stocks, its return had not been forecast until at least next month.
"That was a bit left field for many people," Nick Hungate, executive director at Rabobank, told Agrimoney.com.
"We knew they have released some reserves, but to come to the market already was a bit of a surprise."
As to whether prices were poised to return to their highs of earlier this year, Hungate said it would "take a lot of encouragement" to regain the buyers who helped fuel the rally, but who may have been burnt by the last month's retreat.
"But the fundamentals are still on a knife edge," he added.
"The forecasts for Brazil look wet. There is a long, long way to go before the Indian [cane] harvest is in the bag. Everyone will be weather watching."