Brazil’s Cold Scare Buoys Sugar Futures

The is an outlook that the world’s leading producer of sugar will have colder weather in Brazil and will adversely affect this year’s sugar harvest there.  Sugar futures have reached a six-week today high on the ICE exchange on this reported view.

Later this week temperatures are expected to drop in Brazil’s south-central sugar growing region affecting their sugar-cane fields – according to a prominent East Coast weather service.  Apparently “frost” isn’t in the forecast, but some of this year’s crop has been already damaged by freezing temperatures only last month (cited by a Brazilian university research group).
           
Kevin Riordan, director of research at Capital Trading Group in Chicago, had this to say regarding the current sugar futures situation, The recent rally in sugar futures is largely due to weather concerns in Brazil’s main growing region.  While the rainy and cool weather could cause some disruptions in the harvest, I feel the (sugar futures) market is getting a little ahead of itself and it’s too soon to call this a new bull market.”

The technical trend for sugar futures has changed upward only in the last three weeks.  I am expecting technical resistance up at these levels (near 1730) and haves exited my long position held since the middle of last week.  Looking for another way back in to sugar futures upon the next pull-back in sugar prices.

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