So how is Australian sugar priced?     Sugar Commodities

The key elements are No.11 Sugar futures, the exchange rate and the premium (basis). Farmarco bring you unparalleled expertise in managing these elements.

Sugar Futures price formula

Why manage sugar price risk

Australian sugar prices graph

Click to download a larger version of this graphic as a PDF.

Until recently, both sugar mills and growers have had no control over their price and have simply received a common pool return. However, since 1 January 2006 there has been the increasingly ability to capture prices up to 3-5 years forward. This has given the industry significant ability to control its own price along with the associated responsibility.

During this period (past 10 years to the end of 2014), Australian sugar prices have averaged $430 a tonne and have ranged from $219 to $750, although more generally prices have tended to trade within a $320 to $770 range.

How does this impact you? Well if you for example had 1,000 tonne of sugar to market (or equivalent cane to price) then the value of that tonnage would tend to range between $320,000 and $770,000 or a variation of $450,000.

Considering that the marketing costs of attaining better values are not high the dollars gained through marketing and risk management tend to flow right to your bottom line profit. So effective marketing can have a significant influence on your long term profitability.

At a point in time the sugar (or cane) produced must be priced - this can be done either as forward pricing or in other cases balanced into a pool.

Products available for forward pricing and price risk management:

  • Forward target price (sugar priced forward in A$ a tonne) through generally the mill
  • ICE futures and Options contracts (used to hedge price risk)
  • Bank Swaps in A$ or US$ terms based on ICE futures (used to hedge price risk)
  • Pools

« Farmarco Sugar Commodity services

Contact Farmarco to discuss which of the Sugar Commodity service options might suit you.

Farmarco    104 Herries Street, Toowoomba, Queensland    Phone: +61 7 4637 6400    Fax: +61 7 4637 6464    Email: farmarco@farmarco.com.au