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Imperial Sugar Co. Message Board

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  • gallery_pup gallery_pup Feb 9, 2010 8:28 PM Flag

    Fundmental questions: does higher raw sugar price benefit earning???

    Like any refiner, as long as IPSU can pass through the higher wholesale cost via the retail price, margins will increase. But, when the wholesale price goes up faster than the retail price, margins get squeezed. So there is typically a lag in the retail price on the way up that have a negative effect on margins. If wholesale sugar maintains it higher price, it will pull the retail price up with it in catch-up mode.

    Once and IF sugar gets into a steady state at higher levels, increased production will also begin to favor margins.

    However, it's when the wholesale price starts to decline again, with retail prices slower to follow that margins widen once more.