Low Brazilian Production Lifts Sugar Futures

Sugar production in the world’s largest sugar growing region in Brazil is said to have declined by almost one-third for the first half of this year.  Too much rainfall is to blame as the downpours have prevented normal harvesting.

The Brazilian sugar mills produce nearly one-fifth of the world’s sugar needs and about 45% has been devoted into sweetener, and the other 55% has been processed into ethanol.  Sugar output for the next crop is expected to rise nearly 6%.

Bret Aaron, head of trading operations at Global Futures in Encino, CA, said today in an e-mail interview regarding the current sugar futures situation, “Traders anticipate the Brazil (sugar) crop will become available, but the harvest pace so far has been slow due to rains in areas ready to harvest and at ports as mills attempt to deliver.”

Sugar futures are in a newly developed uptrend.  We are once again long sugar futures, and as long as the volatility remains low, we can expect our protective stops to remain tighter then usual.

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