Soaring sugar prices: nill effect on U.S. plantings

Sugar continues to soar. That will have little, if any, if any effect on sugar acres in the U.S. this year. The 2010 sugarcane crop already has been planted, and marketing allotments also are fixed for cane and beet sugar.

Here's a report from John Christopher with The Linn Group:

Sugar futures hit a 29-year high Wednesday as the market continues to focus on lower crops in both Brazil and India. March sugar settled up 13 points at 29.11 cents per pound. The May contract rose 27 points to close at 27.79 cents per lb. Late in the session, March sugar topped its previous life-of-contract high of 29.06 cents on Jan. 19, peaking at 29.45 cents. This is the highest level for a frontmonth contract since January 1981. Prices continue to attract increased buying as areas of resistance fall by the wayside.

Most analysts said sugar's rise was not due to breaking news so much as the market continuing to factor in a bullish supply/demand. Initial thoughts were the dry weather across Brazil would hurt yield, but sucrose content has been improved.

Yields now look to be 140 kg per tonne of can up from 133 kg last season. The center-south region usually accounts for 90 percent of Brazilian production; this is the first time since 1971 that yields will be better in the northern regions. From the demand prospective, buyers continue to emerge.

Mexico released a statement that it will need to import 450,000 mt during the current cycle to rebuild depleted inventories and meet export demand. Mexican inventories are currently at 500,000 mt or half of normal levels. Indonesia and India also remain around the market. Indonesia is in the process of procuring 500,000 mt by Febuary and India is looking at 1 million mt by end of the first half of this year.

Here's a related link from NewAgTalk.Com that I started. In sugarbeet country, as this thread reflects, sugar production is a contentious issue.