After South American sugar crops were damaged by drought, it appears the sugar output in the world’s largest producing region in Brazil will decline just over 5% this season. Sugar futures have rallied over two-thirds of one-cent since Monday morning.
According to a prominent meteorologist down there, the area that produces the most sugar and ethanol was hit with the driest & hottest summer in seven decades. Sugar mills are expected two lose almost two million metric tons of sugar production because of this.
Barb Levy, chief director for The Fox Group’s futures division in Chicago, had this to say regarding the current sugar futures situation, “Sugar futures are slated to rise due to drought conditions in Brazil. Sao Paulo is experiencing the worst drought in decades. Sugar mills are already seeing a 5.2% decline from last season, in the amount of sugar processed.” Levy added, “The hope is that larger harvesting area will offset most of the drought difficulties.”
The technical trend for sugar is actually down right now, despite this current rally happening. With a clearer picture for sugar futures unfolding, if the rallying continues we could see a resumption of the overall uptrend on the weekly charts.
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