Having already cut the weighting as it neared target price, the remaining position was sold given the recent sharp run up in the sugar price. There seemed no apparent reason to revise the target price upwards from the current levels.
Illovo is a global sugar producer based in South Africa. The company has a large exposure to premium priced export markets in Africa, the EU and US. This ensures downside protection against the vagaries of the commodity price. Even so, with 2009's global sugar production likely to fall short of demand, owing to a large Indian shortfall, the outlook for realised prices is strong. Cane-growing and sugar production operations in Malawi, Swaziland, Tanzania and Zambia provide the bulk of the group's profits. Expansion projects in Zambia and Mali will more than offset any declines in South African production.