Monthly Archives: October 2010

Concerns over sugar crop in Brazil

Although the market is technically overbought which would normally indicate a possible reversal, at least in the short term sugar looks likely to make further gains due to supply concerns in Brazil and a harvest likely to end sooner.

A weak dollar and a rally in corn prices due to a worse than expected crop in the U.S.  also supported sugar and ethanol prices.  However, as open interest is lower in the midst of such a rally this could be an indication that once the rally has lost its steam there could be a reversal.

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The uncertainty continues

Brazilian mills and refineries are buying back sugar contracts from the trade resulting in rising domestic prices in Brazil as well as a likely impact in international markets.

While in India production forecasts have being increased due to a smaller than expected impact following flooding and therefore lower crop loss.   In Russia crop damage due to bad weather resulting in lower local sugar production is expected to lead to increased imports in the first half of 2011. It is expected that Russia will export between 1-2 million tonnes as a consequence.