The recent raw sugar price rally continued today as the sweet commodity traded at around 17.30 cents per per pound, according to Nasdaq data.
Prices have reached a two-year high over the past week in a positive swing that contrasts with many other commodities, particularly metals such as copper and iron ore, whose rally at the start of the year has stalled recently.
Many countries have experienced production disruptions due to the El Nino weather phenomenon. In Thailand, a core sugar exporter in South-East Asia, extreme weather caused by El Niño could reduce sugar production in the country by around 14 per cent, a government official told the Wall Street Journal. Production in India has also been affected.
In mid-May, the US Department of Agriculture forecast global sugar consumption would again outpace production in 2016/2017 and would draw stocks to the lowest level since 2010/2011.
Ahead of Easter, sugar prices rose by 20 per cent month-on-month, also largely as a result of El Niño, which can produce drier than normal weather and interfere with the growing cycles of agricultural commodities.
This year’s El Niño has been the strongest cycle in 35 years, bringing with it above-average temperatures, water shortages and flooding across the world.