Sugar prices continue their upward movement after a slight one-day sale-off. Nevertheless, a potential bearish engulfing pattern appeared yesterday. Today, however, this has probably been invalidated. Sugar prices are helped by much higher oil prices, which mean that most of the cane can be used for the production of biofuels. In addition, price hit local seasonal lows and speculative positioning rebounded last week
Nevertheless, the main reason for today's increases is probably related to the emergence of a major report from an important sugar market player. The report says that due to the current droughts in the Sao Paulo region of Brazil, production could be as low as 31 million tonnes, compared to 38.5 million tonnes last year. This region is responsible for almost 70% of all domestic cane production.Also, it is worth noting that the weather also causes potential production losses on the corn and soybean market. Additionally, May is a month when logistical problems arise related to the export of many commodities.
Sugar is clearly rebounding after yesterday's declines. Source: xStation5
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