Sugar futures, in the early stages of a new downtrend, may be “too optimistic” about Brazil’s rise of sugar production in the next season says one industry analyst. Sugar futures are down five live today currently trading at $0.1315 per pound at the Intercontinental Exchange
The production of sugar is indeed set to rise next season in Brazil’s South Center region, but not as much as others are forecasting because sugar mills there are reportedly approaching their maximum capacity. Estimates for sugar production in the sugar growing region in Brazil is expected to be 33M tons on the lower end, and as much as 34.5M on the higher estimate.
“These estimates for sugar from analysts & economists sometimes do not take into consideration process capacity, breakdowns of equipment, rain delays, strikes from employees (like we saw just late last year), maintenance stoppages,” said Devin Brady, President of Progressive Trading Group in Sherman Oaks, CA, sharing his fundamental assessment of the sugar futures market. Brady added, “There could be as much as 15% non-usage for a sugar mill due to unforeseen circumstances.”
The technical trend for sugar is “down” as of late last month. Solid support for sugar futures prices comes in at .11 cents per pound.
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