Sugar Prices remain constant
Sugar prices have remained fairly constant this week following a rally last Thursday and Friday.
Net longs on sugar increased during the week, according to data from the Commodities Futures Trading Commission. Sugar futures have pushed higher of late on fears that the floods in Thailand will seriously disrupt sugar production in that country, while Indian output has been hit by floods in Maharashtra state, India’s largest sugar-producing region. However, the rally faltered as eurozone concerns took hold on global markets. Traders throughout the world are awaiting the outcome of the weekend summit in Europe, which is being billed as the meeting that will solve all of the eurozone’s problems. However, it seems unlikely that the summit will produce all that the eurozone hopes and needs, and this could prompt some risk-off selling into the new week. Still, sugar futures will receive support from the continuing supply disruptions, which will help prevent prices of the sweet commodity from slipping too far.
In addition, Chinese buying of sugar could act as a prop to the sugar price, with the country likely to expand its import quotas for the first time in seven years. Such an event occurred in corn, when China went shopping for the commodity during a price drop, and agencies such as the US Department of Agriculture and the International Sugar Organisation (what a fun place to work that must be) expected China to lift purchases in order to help offset a drop in its own production, due to dry weather in some provinces.
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