(April 1): Global sugar prices are rebounding after a prolonged slump, as the war in Iran squeezes supplies from a major refining hub, boosting sales from producers outside the Middle East.
Benchmark white sugar futures in London had been trading low near pandemic levels as part of a prolonged slump from ample supply and muted demand.
But since the war began, prices have surged to a six-month high, as the hostilities all but halt maritime traffic through the Strait of Hormuz, a key route for raw sugar heading into local refineries and white sugar to head abroad. Some refineries in the Middle East are willing to shoulder the steeper costs that come with relying on ports such as Fujairah, Khorfakkan and Sohar for feedstock.
The most-active contract capped an 11% monthly gain, the highest since 2023. Roughly 6% of the world’s sugar trade has been affected, according to Claudiu Covrig of Covrig Analytics.
Imports are likely to remain subdued through at least June, with further downside risk if disruptions extend into the third quarter, said Ankit Jagta, a Dubai-based sugar trader.
See also: Iron ore extends gains after best month since September 2024
As traders seek alternative sources of refined sugar, shipments from India and Thailand are accelerating. Flows from locations outside the Middle East grew sharply last month, with Thai exports to major consumer Sudan reaching about 353,650 tons as of March 25, up from 45,000 tons in February, according to shipping data compiled by Covrig Analytics.
Indian mills received overseas orders for as much as 250,000 tons of white sugar since the start of the war, according to Rahil Shaikh, managing director of Meir Commodities India Pvt. That’s a significant share of the 650,000 tons contracted since the middle of November, according to a survey of five analysts and traders.
The Indian government approved two million tons of overseas sales for the year ending September, but exports from the second-largest producer were lagging due to low prices. A weaker rupee is now encouraging mills to export more, with the recent global price surge improving margins, analysts at Green Pool Commodity Specialists said in a report.
Uploaded by Chng Shear Lane
