According to the Financial Times, “a mysterious white substance is being smuggled over the border from Vietnam to China in growing quantities.” Of course this substance is a staple of modern Western society and something increasingly in demand in China and other emerging markets.
With the cost of healthy food for India’s 1.1 billion people skyrocketing, processed sugar is becoming almost affordable by comparison. This is an opportunity for traders to adjust their exposure to ongoing shifts in global sugar consumption.
Strong cane harvests in key growing regions like Brazil, India, and Thailand have depressed sugar prices, diverting consumption from food to fuel and heightening pressure on corn syrup and ethanol producers alike.
The Kingsman research firm predicts a worldwide surplus of 4.7 to 5.7 million metric tons of sugar over the next 18 months, according to the Wall Street Journal.
Basic supply and demand are bolstering prices for most agricultural commodities, but one of the top food traders is not universally bullish.
Demand for cookies and candy in India has reached the point where the country — the world’s largest sugar consumer — can no longer meet its long-term supply needs.
The price of sugar has jumped to multi-month highs thanks to worries over the size of Brazil’s sugar crop. This marks a reversal of fortune for sugar which has been among the worst performing commodities this year.