Frank Jenkins: Sugar Prices Now Linked
isc | Aug 28, 2009
Noted sugar industry analyst Frank Jenkins of The Jenkins Sugar Group writes:
The rally in world sugar prices has now linked world and US raw sugar prices, as the chart below clearly indicates.
As the ICE #11 futures contract is a “Free On Board”, or FOB contract, and the ICE #16 futures contract is a CIF DP, or delivered, contract, we have added 3.00 cents of costs to the #11 contract price to put the two contracts on like terms. It can be deduced that any further increases in world sugar prices will result more or less on a penny for penny increase in US raw sugar prices.
While the US market has historically commanded a significant premium to the world price due to the nature of the US sugar policy, a second year of deficits in the world market has allowed the world price to catch up to the US price.
Courtesy The Jenkins Sugar Group
To learn more about The Jenkins Sugar Group, click here.
Filed Under: Experts
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