Shrinking Surplus in Asia Boosts Sugar Futures

Sugar futures has much to digest…the world’s biggest raw-sugar importer, Indonesia, is expected to double its sugar this year while demand from China is near record pace – gov’t & industry data shows.  This demand is helping to narrow the global sugar surplus most notably in developing nations from China to Indonesia.

The outlook appears when the 2012-2013 season for sugar began, actual consumption may been 3M metric tons bigger than expected.  The Int’l Sugar Organization translates this to a 2% increase in their forecasted demand (last year) which coincides with worldwide demand growing 2% each year for the past five-years.
           
Kevin Riordan, director of research at Capital Trading Group in Chicago, had this to say regarding the current sugar futures situation, The world-wide demand increase in sugar (sic) is largely due to the westernization of the global diet.  People generally are drinking more soda and eating out more which directly leads to an increase in sugar demand.”  Riordan added,The 3 million tons of increased sugar demand this year has reduced what was believed to be a large surplus and reduced it to a very moderate surplus.”

The technical trend for sugar futures is “up,” but appears weak at this point.  I do see accumulation at these levels and feel confident being long sugar futures at this time.

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