Profit Taking on Rains Sinks Sugar Futures

Sugar futures sold off significantly for the first time in a week as traders took profits before rains come to the thirsty sugar growing region of Brazil.  Brazil is the world’s top producer of sugar and right now there is enough dryness to seriously threaten the production of this year’s crop.

This month alone sugar futures have seen a 12% advance and the biggest single monthly gain since the early summer of 2011.  The main sugar growing area of Brazil’s center south is plagued with less precipitation which is expected to diminish production by 6.5%.

Sugar futures saw early pressure as traders were taking profits after the recent rise. By the session end, however, losses were scaled back to just a few tics due to concerns of damage to Brazil’s crop, stemming from ongoing drought conditions,” said Barb Levy, chief director for The Fox Group’s futures division in Chicago, regarding the current sugar futures situation.

The technical trend for sugar has emerged upward only recently this month.  I am looking for opportunities to go long sugar futures from here on out.

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