Sugar futures eased back a bit today following yesterday’s 3% rally on news of rains in South America helping to extend the current rally. Sugar futures closed down 13 points to settle trading today at .1130 cents per pound at the Intercontinental Exchange .
Despite the sentiment of sugar being more abundant than sand on the beach, bullish factors are emerging such as the Brazilian rains seen stalling the sugar-cane harvest in South America’s center-south growing region, and sugar output behind analysts expectations last month. Brazil is one of the world’s top producers of the sweet stuff and mills in that region are responsible for reportedly 90% of the country’s sugar output.
Nicholas Medina, a futures and options specialist for Capital Trading Group in Chicago, had this to say regarding the fundamental assessment of the sugar futures markets, “Brazil is big on bio-fuels and much sugar-cane is needed to proper ‘ethanol’ as their main ingredient – as corn is the U.S.’s – and their busy driving season in that hemisphere is approaching.” Medina adds, “When you add the driving season demand, adverse rains over the past few weeks, and the possibility the market has already priced-in all the bearish news, then we could possibly have a trend reversal.”
The technical trend for sugar is down, however sugar futures are at a crossroads at this time. A trade above .1165 in the near-term could push sugar futures to an uptrend while a trade down to .1084 could keep the lower prices intact – a plus for the consumer.
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