It’s been a nerve-wracking month for those trading in sugar futures, as logistical gridlock at Brazilian sugar ports ran into a surge in demand on the eve of the Ramadan holiday in the Muslim world. Food manufacturers in Egypt and other nations use huge quantities of the sweetener to produce traditional desserts for late-night feasts, and some pundits were predicting a chain of queued ships from Sao Paulo to Dubai.
Today, however, signs that output may surge in both Brazil and India, the world’s largest producers of raw sugar, pushed prices back down. The International Sugar Organization said that global demand will rise 8.5 million tons this year, but that will be met out of existing inventories. Next year’s production, says the ICO, will rise 9 percent.
The price of Number 11 raw sugar futures on the InterContinental Exchange slipped over 4 percent to 18.59 cents per pound. The sweetener has repeatedly tested a psychological resistance level of 20 cents per pound.
Extra production won’t help, though, if antiquated infrastructures built on the back of aging trucks can’t get the stuff to market. Both Brazil and India need a significant overhaul of their agricultural commodity shipping and storage.
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.