Sugar may climb 80 percent to as high as 40 cents a pound on global supply shortages, said Singapore-based commodity hedge fund manager Michael Coleman.

“Sugar is caught in a perfect storm,” he said in a Bloomberg Television
interview. There is “a big hole” in world supply and no obvious
solution in the next six to nine months, said Coleman, 49, managing
director of Aisling Analytics, which runs a $1.4 billion fund invested
in energy and agriculture.

The sweetener has surged 88 percent this year, reaching a 28-year high,
as India, the biggest consumer, had its driest June in 83 years and
parts of Brazil, the largest grower, were drenched by rainfall four
times more than normal, too wet to harvest. World demand will exceed
output by as much as 5 million metric tons in the year ending September
2010, according to the International Sugar Organization.

“Is there a possibility of reaching 40 cents a pound? Certainly,” said
Coleman, whose fund returned 24 percent in 2008. “From this point on,
it depends how price affects demand.” Sugar reached a peak of 23.33
cents a pound in New York on Aug. 12 and ended at 22.21 cents
yesterday.

Investor Jim Rogers and Rabobank Groep NV have said the rally may have
some way to go. Rabobank said yesterday it anticipates the “bull” run
may not be complete even if prices consolidate around 20 cents a pound.

India, Brazil

“Sugar is certainly going to go much, much higher during the course of
the bull market,” Rogers, chairman of Rogers Holdings, said in an Aug.
6 interview in Singapore. “Sugar is still 70 percent below its all-time
high and not many things in life are 70 percent below what they were in
1974.”

The Indian crop, the world’s second biggest, is “under stress” and “we
think it is unlikely to be more than 15 million or 16 million tons” in
2009-2010, said Coleman.

India’s monsoon season, which brings 73 percent of the nation’s annual
rainfall, may be the driest in seven years, a weather bureau official
said yesterday.

“The world has to depend on Brazil,” Coleman said. There was a question
over how much of the country’s cane crop can actually be turned into
sugar, he said, as millers have invested heavily in ethanol and
“somewhat neglected” the capacity for making sugar.

“Brazil seems to be fairly maxed out in the short to medium term” with
“about 43 percent of its capacity able to be delivered to the market as
sugar,” Coleman said. Building capacity would take a year, he said, and
“we’re still living with the credit crunch so how does the Brazilian
sugar refiner raise money? It’s not as easy as it was three years ago.”

Supply Response

World farmers may raise output after prices jumped, he said.

“There’s probably a big bear market coming in 2011 because there will
be a supply response,” he said. “But it won’t be in time for the first
half of 2010.”

The overall direction of commodities is a “macro call” about world
economic growth and the direction of the dollar, and there is not too
much clarity, he said. He is inclined to see the dollar stabilize at
current levels, he said.

The Reuters-Jefferies CRB Index gained about 16 percent this year,
aided by a weaker dollar as investors sought a hedge against inflation,
and a recovering global economy. The dollar index, measuring the
greenback against six major currencies, has dropped 3.5 percent this
year.

In other calls, Coleman said he was “moderately bullish” on the premium
of white sugar over raw, and he was long “corn versus wheat” because
wheat had large inventories and corn was in a position “to attract
incremental demand from biofuel.”

Wheat, Corn

“Corn is more a relative play against wheat,” he said. Wheat is 53
percent more expensive than corn versus a 12-month average of 43
percent, according to data compiled by Bloomberg.

Coleman’s fund return was flat this year to July 31, he said in an
e-mail yesterday. His allocation is 35 percent in energy, 30 percent in
agriculture and 35 percent in so-called soft commodities and other
assets, he said.

The Merchant Commodity Fund won a Eurekahedge award in May 2008 for the
Best Asia (based) CTA/Managed Futures Fund, according to the web site
of Eurekahedge Pte., a Singapore-based research firm.

Source: Bloomberg

Search to find what you want

• Sugar Advance 80% on supply crunch, says Coleman

    Sugar may climb 80 percent to as high as 40 cents a pound on global supply shortages, said Singapore-based commodity hedge fund manager Michael Coleman. “Sugar is caught in a perfect storm,” he said in a Bloomberg Television interview. There is “a big hole” in world supply and no obvious solution in

• Sugar Advance 80% on supply crunch, says Coleman

    Sugar may climb 80 percent to as high as 40 cents a pound on global supply shortages, said Singapore-based commodity hedge fund manager Michael Coleman. “Sugar is caught in a perfect storm,” he said in a Bloomberg Television interview. There is “a big hole” in world supply and no obvious solution in

• Raw materials are further Advance, Hermes Fund O Shea Says

    Commodities, as measured by the S&P GSCI Light Energy Index, may gain as much as another 10 percent this year, led by oil, sugar and coffee, according to Colin O’Shea, head of commodities at Hermes Fund Managers Ltd. The index, which Hermes uses as a benchmark, advanced 15 percent last

• China Oct-Nov sugar production rose to 6.12 million tonnes

    China produced 6.12 million metric tons of sugar in the crop year to January 31.

• India: production of sugar for 2009-10 to Surpass 16 million tonnes, says Pawar

    Union Agriculture Minister Sharad Pawar announced that the sugar productivity for the marketing year (0ctober 1, 2009 to September 30, 2010) would surpass 16 million tonnes mark assisted by higher yield in two key producing states. Maharashtra is India’s top sugar manufacturer and Uttar Pradesh the top sugar cane producer.

• India seen as major importer of white sugar

    India is set to emerge as a major white sugar importer in calendar 2010, and is expected to buy some 3 million tonnes, Jonathan Kingsman, head of the Lausanne-based Kingsman SA consultancy, said on Tuesday. He said India’s requirement for whites was due to delays in production constraining mills’ capacity

• India to import: meet

    It is required for India to import an additional 2 million tonnes (MT) of sugar during 2009-10 season in order to meet the domestic demand, an industry body said. “The country has contracted to import 3.8 million tonnes of sugar so far this season, of which, 1.8 million tonnes have

• Sugar imports by India to hold prices, combined deficiency

    India, the biggest sugar consumer, hasn’t bought the commodity from abroad in the past 45 days as high global prices and a shortage of rail wagons deter buyers, worsening a domestic shortage. Sugar stocks are mounting at ports, including Kandla in western India, because of inadequate rail racks, Vinay Kumar,

• Commodities set for biggest drop in 13 months on Demand Outlook

    Commodities headed for the biggest monthly drop in 13 months on concern that demand may wane as governments seek to control economic growth. The Standard & Poor’s GSCI Index of 24 raw materials is down 6.2 percent this month, the most since December 2008, led by slides of 16 percent

• RP to export more sugar to the United States, despite the weakness of the local supply

    THE PHILIPPINES, which has become a net sugar importer this year, is willing ship an additional 75,000 metric tons (MT) of the commodity to the United States by the third quarter on top of its annual sugar quota allocation. The Sugar Regulatory Administration (SRA), in its Feb. 23 letter to

• Indias Commodity Futures Turnover May Advance 43%

    Turnover on commodity exchanges in India, the world’s biggest gold consumer, may rise 43 percent to a record this year on higher prices and volumes, the industry regulator said. Commodities worth 75 trillion rupees ($1.63 trillion) may trade on India’s 22 exchanges in the year ending March 31, up from

• India s Commodity Futures Turnover May Advance 43%

    Turnover on commodity exchanges in India, the world’s biggest gold consumer, may rise 43 percent to a record this year on higher prices and volumes, the industry regulator said. Commodities worth 75 trillion rupees ($1.63 trillion) may trade on India’s 22 exchanges in the year ending March 31, up from

• Norway oil fund sees record is in Q3

    Norway’s oil fund posted a record quarterly return of 13.5 percent on investments in the third quarter due to a rebound in international stock markets, the central bank said Tuesday. Norges Bank said the 163 billion kroner ($29.2 billion) in returns lifted the value of the Government Pension Fund-Global to

• Commodities Slump a , says Morgan

    A slump in commodities last week was caused by a strengthening dollar and raw materials remain “hot- ticket” investments for 2010, Morgan Stanley said.

• STX Group Companies Rise After excluding Daewoo Bid

    STX Corp. and affiliate STX Pan Ocean Co