Jakarta -The price of sugar trade is declining amid the projected supply surplus in the 2017/2018 season which is not offset by strengthening demand.
Aakashi Doshi, Citigroup Inc. analyst. based in New York in a recent report projected that the global supply surplus will reach 11.1 million tonnes in the 2017/2018 season.
The calculation of the season begins in October and ends in September of the following year. That is, the beginning of the season is in the fourth quarter of each year.
The investment bank raised its outlook by about 2.8% from its previous projection in February 2018 on the grounds of increased production in Asia, such as India and Thailand.
“The surplus is big enough and almost fulfills the full year demand in the United States,” Doshi said.
Donald Selkin, New York Securities’s chief market analyst, said that oversupply conditions will have a serious impact on prices with considerable potential for suppression.
“Given the current fundamentals, prices will not get better,” he said.
Selkin said the contract price weakness would occur if there were no major changes in demand.
In addition, supportive weather conditions in the food-growing process will encourage production and trigger oversupply continues.
Observed, the year-to-date sugar price has weakened by 17% from the closing level of US $ 15.16 cents per pound on December 29, 2017.
At the close of trading on Friday (16/3), the most active contract price in May 2018 at ICE New York fell 0.09 points or 0.71% to US $ 12.65 cents per pound.