Imperial Sugar "New" (IPSU)

[Frankiy]

LONDON, Feb 03, 2012 (Dow Jones Commodities News via Comtex) -- Sugar prices are "condemned" to go lower and stay there for some time because of the extent of the global supply surplus, Marex Spectron said Friday.

The commodities brokerage said the surplus is now so big that in order to get rid of it, prices need to fall below the ethanol parity level at 20.5c/lb and the market has to go into a carrying charge, which means lower prices.

Raw sugar for March delivery on ICE is currently trading at 23.79c/lb.

The brokerage said that another bearish factor is the increasing realization that the Centre South Brazil cane crop next year could see a massive increase in production, with acreage planted to cane up by around 3%, while weather conditions are also anticipated to remain good.

Marex also said that production in India is likely to hit around 25.5 million tons, around 1 million tons ahead of last year, with yields down in Maharashtra but up in Uttar Pradesh.

-By Michael Haddon, Dow Jones Newswires; 4420-7842-9289; [e-mail]

(END) Dow Jones Newswires

02-03-12 1105ET