Indian Mill Shutdown May Lift Sugar Futures

Sugar futures may be starting a much needed lift after dropping more than 2.5 cents from its high only last month.  Apparently some sugar mills in India are extending what was once a temporary shutdown which can potentially curb global output – they’re the world’s second-largest sugar producer.

The underlying problem is the Indian government enacted artificially high prices for the sugar mills to pay the sugar farmers and the mills claim they simply can’t afford these high sugar prices.  Indian sugar producers can afford to pay 225 “rupees” per 220lbs of sugar, but their government has set the price at 280 rupees – almost a 20% difference.
           
Barb Levy, chief director for The Fox Group’s futures division in Chicago, had this to say about the current sugar futures situation,The mills shutdown will reflect in sugar (futures) prices eventually.”

The technical trend for sugar futures is down and their has been no significant interim rally from the mid-October highs.  We must be patient with sugar futures until a more lower-risk scenario unfolds.

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