The price of sugar gained through Tuesday’s trading, then fell precipituously in the last hours. After opening around 19.8 cents per pound, the sweetener climbed as high as 20.1 cents per pound before crashing down to just 19.76 cents.
Some concern stemmed from the possibility of lower-than-expected supplies in Brazil, the world’s largest producer of sugarcane.
“If September and October don’t have enough rain, we need to lower the forecast,” Marcos Sawaya Jank, the president and chief executive officer of Brazil’s Unica sugar association, told Bloomberg News. “If it doesn’t rain it will also affect next year’s crop.”
Currently, Unica estimates that Brazil’s central/south region, which produces most of the country’s sugar, will produce 570 million tons of the sweetener.
Dry weather has also generated concerns about productivity in Russia and China.
One upside of the dry weather has been a decline in the number of ships waiting to load sugar at Santos and Paranagua, the largest ports in Brazil and a major bottleneck in the supply chain of the commodity.
Commodity futures brokers and traders aren’t quite ready to price in the potential tightening of supply yet, though, and the 20-cents-per-pound level remains a barrier to upward movement.
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