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.
you have it all wrong, high raw sugar means high refined sugar, IPSU simply exploits the spread between the two, the larger the spread the more $ they make. The earnings report had more to do with operations than the price of sugar. if IPSU would of had their Port Wentworth plant at full capacity during the entire quarter, the quarter would of been an absolute blowout. So now, the blowout Quarter will occurr in quarter 2, instead of the first quarter because the plant is slated to be at full capacity by the quarter's end.
Well what you said was the rationale when I bought IPSU. Since I didn't want to buy raw sugar futures, I bought IPSU. It hasn't worked very well for me. well, if I trade this stock instead of buy-and-hold, it could have been very good, however, I am not good at trading.
No offence, but I think I might have done more homework than even you did. The Q2 ER won't be that good either since the plant will not be at full capacity till the end of Q2.