At The Close: Sugar: Beyond The Bear Market by John Rose
Sugar: Beyond The Bear Market
On May 9, 2006, the New York Board of Trade
sponsored its first sugar convention in New York
City. The event was well attended, and many of the major
players in the sugar industry were in attendance. Needless to
say, the bullish tone of the event marked a top in the sugar
market, and futures have retraced over 50% since then.
One of the eventís key speakers was Brazilís Eduardo
Pereira De Carvalho, the head of the Union of Sugarcane
Agroindustry. The Brazilian stance regarding sugar has
changed considerably since the government adopted an ethanol strategy. At this time, Brazil views
sugar as an energy source first and a
food source second. Keep in mind that
Brazil was viewed with amusement
when it began its ethanol program.
Back then, oil was trading in the low
teens and gasoline was abundant and
cheap. The courage and foresight Brazil
demonstrated is beginning to show
real benefits. You can bet the Brazilian
government will be pushing its longstanding
ethanol program worldwide,
as any pioneer in an industry should.
The result of this ethanol push can only
come at the expense of white sugar.