Growing Supply, Waning Demand for Sugar Futures

According to a Swiss-based sugar broker, the price for raw sugar originating from Brazil is waning from slowing demand and a building supply.  Brazil is the world’s largest producer of sugar, and their forthcoming sugar harvest looks to be promising.

Brazil’s main sugar growing region’s output has reportedly climbed 2% recently as favorable weather has helped expedite the sugar harvest.  On the flip-side, sugar cane processing has been down 22% from the beginning of the 2012-13 sugar growing season through mid-July.

Barb Levy, the chief director for Futures & Options Xecution’s futures division in Chicago, stated today regarding the current sugar futures situation, “Sugar (futures) found additional pressure today as the demand picture is continuing to slow and Brazilian sugar output showed a 2 percent rise in July due to favorable harvesting conditions.”

The trend for sugar futures has just rolled over downward, but I will require a pull-back higher in sugar futures before getting short, or a low-risk way into the short-side of this market.  Sugar futures is one of my better markets, but the last sugar futures trade ran away on us more than I would have preferred.


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