What’s ahead for sugar, oil and flour?

January 30th, 2015

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Category: Grains, Oilseeds, Sugar

Irrigation_Drought450x299(IngredientNews) – International Food Products’ experts recently presented a close look at the forces shifting the sugar, oil and flour markets. At the January webinar, viewed by top food executives and purchasing directors, sugar trader Bill Holtgrieve, oil expert Michael Lane and flour executive Carl Zimmerman revealed the latest news and predictions on key commodities’ supply and pricing. If you missed it, view here, and read our wrap-up:

Sugar

The world sugar market is still in a surplus. Keeping the #11 market under pressure, this surplus should continue for the next six months. The domestic sugar market is looking for clarity on the lawsuit against Mexico Sugar Refiners. Refiners, who were not a part of the lawsuit, have requested that the investigation continue. We are not sure if this will have any impact as all parties to the lawsuit have agreed to settle. Once the Mexican sugar situation is settled, we see domestic sugar prices trading in a tighter range, based on the USDA managing for a 13.5% stocks-to-use ratio. Going forward, it appears that the beets will have the most pricing flexibility and will continue to raise prices as they scale up selling. Canes will be secondary suppliers except for the northeast and the southern 25% of the US, which they should control. In regards to the 2015 and 2016 outlook, we believe that those who book on early offerings will be rewarded.

Oil

Strong palm oil stocks are making palm oil more competitive in the world market. Strong export demand for soybean meal has resulted in large crush volumes and healthy crush margins. There is great potential for record soybean crops in Brazil (94 mmt) and Argentina (55 mmt). We are expecting a 2-4 million acre increase for soybeans for the 2015/2016 crop year. Informa, a private forecaster, projects soybean acreage at 88.78 million acres and corn at 88.01 acres. Price activity for both, over the next two months, might influence these early predictions. As long as we achieve a good start to the US soybean crop, look for a flat futures market with more downside potential than upside. We do not believe basis levels will firm as we approach the end of old crop soybean supplies.

Flour

We expect pricing will be steady to lower in the 2015 crop year. Flour production for 2015 is projected to be at an all-time high due to favorable growing conditions. The US hard wheat crop is off to a great start. From last year’s highs, we see basis levels down, with railroads moving cars promptly.

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