Catching the Bottom
The domestic raw sugar market is trading at or near the lowest levels seen over the last year.
The last time we saw levels this low was right after the International Sugar Colloquium held in Palm Springs CA in March 2023 when negotiations for future business began in earnest.
Although industrials booked earlier than ever in 2023 to get coverage on as world and domestic markets rallied 8c in about 10 weeks – many still ended up booking at raw sugar levels above where the NY#16s are trading today.
In the last 6 months, we’ve seen two major sell-offs in world market sugar pricing in correlation with US raw sugar prices in the current high-tier environment.
In a market that has given little back to buyers since April 2020, the Nov/Dec’23 drawdown saw prices come off 8c+ from decade-long highs. The most recent drawdown in Apr’24 has given 3.50c back over just 3 weeks and positions us near 52-week lows today.
A Reason and A Season
Explanations for world market easing include:
Continued stellar Brazilian crop performance.
A weakening Brazilian Real.
Better weather projections for India and Thailand.
We believe much of this easing has already been discounted as reflected in the ~30% lower #11s price over the past 6 months.
The Future
As the market looks forward, many variables and uncertainties are percolating on the world stage.
Strategically, if you can lock in year-over-year savings, which we believe most industrials can do today, taking action at or near 52-week lows is always a good idea.
If the hope is to hold out for lower prices, why not lock in some profits now and play the rest of 2025 with house money?
