Friday, September 13, 2013

Sugar Sweetens?

No sooner had I posted the recent comment and chart (updated) on sugar prices this week than, yes, the sugar futures price gapped up to its highest in some months. Brazil remains the critical factor: Brazil mills lift cane crush but sugar output lags.
Dry weather allowed Brazilian cane mills to ramp up processing volumes, but output of sugar came in below year-ago levels, despite the improved returns from producing the sweetener rather than ethanol.
An interesting report last month in Rupert's Wall St Journal on US intervention in their protected sugar market by the USDA:
The agency has been attempting to stave off a potential wave of defaults on $320 million in outstanding federal loans to U.S. sugar processors that come due at the end of August and September. The USDA estimates that defaults would occur when domestic sugar prices are below 20.9 cents a pound.
Apparently this involves the USDA buying the sugar to sell to ethanol processors at losses of at least 50%. That sounds like the sort of scheme that would excite Bob Katter! Has anyone heard from Bob this week?

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