>SUGAR SECTOR UPDATE (VENTURA)

El Nino to dampen crop in Brazil
Parts of Brazil have had four times more than normal rain due to the El Nino effect, adversely affecting sugarcane crop. Due to this, Brazil’s sugar production is expected to fall short of the estimated 32 – 33 mt to 30.3 million tons in 2009-10.

Competitive buying pressures from countries apart from India to further accentuate the shortage
Besides India, the largest consumer, with contracted imports of 4 million tons of sugar, neighboring Pakistan and Bangladesh also plan to import the sweetener to cater to their domestic demand. “Pakistan must import as much as 1 million tons of sugar by December’, as per the spokesman for the Pakistan Sugar Mills Association. Indonesia, Southeast Asia’s largest sugar buyer, India, may also step up imports to stem the domestic prices.

International raw sugar prices are expected to reach 30 cents / pound
October raw-sugar contract, which is trading at 23.45 cents a pound on ICE Futures U.S., is expected to go up to 30 cents a pound in 2010’s first quarter on constructive fundamentals and support from speculators. Reports of hoarding, confiscation of stocks and rationing in various parts of the world are indicative that there is more upside in near future.

World outlook
Worldwide demand for sugar will exceed output by 9.35 million tons in the year ending Sept. 30, more than the 7.8 million tons projected in May, according to London-based International Sugar Organization.

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