Sugar futures were hit with a glut following multi-year highs in 2011 and has since given back two-thirds from its high prices, but one expert says sugar prices may recover in the 2016-17 season. Sugar futures are down 12 points from yesterday’s close closing the day near 10.61 cents per pound at the Intercontinental Exchange.
The top sugar producing and exporting countries (such as India & Thailand) actually subsidize sugar growers and this fact could keep a lid on higher prices short-term – says the CEO of a Brazilian sugar company. He goes on to say that investment has been rather low in cash-strapped sugar mills and this fact alone could see lower volumes of sugar production which will support values to the product.
“Low prices of any product – such as sugar (futures) in this case – can only stay low for so long,” said Jeff Evans, Vice-President of the Managed Accounts Division for RMB Group in Chicago, regarding the fundamental assessment of the sugar futures markets. Evans added, “Eventually there are less workers to produce the product affecting supply, while others see the value in it creating supply.”
The technical trend for sugar is down with no bottom yet in sight. Pretty soon holiday demand for sugar should pick-up, but I don’t see any fundamental issues that would change the overall trend happening any time soon – enjoy the low consumer prices while we can.
ALL COMMENTARY IS CONSIDERED OPINION & VIEWS FROM THE AUTHOR AND NOT A SOLICITATION OF ANY SECURITIES. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION.
Recent Comments