Sugar fluctuations buffered in N.Z.

Press, 28 August 1980, Page 7

Sugar fluctuations buffered in N.Z.

Because of world shortages, sugar prices are rising faster than oil and gold in some countries. Long-term supply contracts with Fiji and Australia help protect New Zealand from much of the supply and price fluctuations of the international free market, where buyers and sellers negotiate directly or through agents based usually in New York or London.

But some sugar supplied under contract from Fiji and Australia is linked to world prices and so fluctuates with them- Furthermore, New Zealand sometimes has to buy on the international free market to supplement its main supplies. Fluctuating world prices were the sole reason for the June rise of 17 per cent, according to the managing director of the New Zealand Sugar Company, Ltd, (Mr W. P. Ralph),.

The June rise was the second this year, and the company says that because of “forward commitments for the purchase' of raw sugar,” there should be no need for another increase until 1981. But 1981 is little over four months away, and the supply shortage on world markets for 1980 is expected to continue through next year. A leading London, sugar company has reported that for the 1979-80 year ending August 30, world sugar production at 85 million tonnes, will be 7 million tonnes short of the estimated demand. The shortfall is to be : met from'stored world stocks. The shortfall caused prices to increase on the London market from about SNZSIS a tonne on April 1 to about SNZBOO a tonne on June 16, which is a rise of SNZ2BS in 11 weeks. Prices more than trebled in the year to June L

. The 1980-81 year does not look bright. Crops in Cuba have cane rust; bad weather has hindered growth in South Africa and Russia. On top of that, less sugarbeet has been planted in Russia in order to grow more animal feed grains because of the United States embargo.

The Price Stabilisation Agreement, made between the New Zealand Sugar Company and the Government, can even out the effects of world price fluctuations only to a limited extent.

Meanwhile, the incentive is strongly presented for people to cut down on sugar intake. Alternative sweeteners continue to be packaged and marketed more and more skilfully. But many are still unable to compete with sugar prices, and the sugar company does not see them as serious competition.