Price breaks above 16 cents per lb on supply concerns
Sugar futures recently bounced off the long-term downward trendline and today price returned above 16 cents per lb. Sugar price is approaching its highest level since May 2017 supported by hopes of a global economic recovery and supplies concerns in Thailand and Brazil. Sugar production in Thailand is expected to decrease to 70 million tonnes compared to previous estimates of 75 million in the 2020/21 crop year due to the drought and fewer sugar cane plantations as Covid-19 pandemic affected demand for sugar-related products. In Brazil, which is the major producer, the drought in the central and southern parts of the country is likely to negatively affect the harvest next season. In addition, many farmers allocate a significant part of their cane production to the better profitable domestic ethanol market, which additionally contributes to lower sugar inventories. Looking ahead, sugar supplies are expected to remain tight at least until April, when output in Brazil may start to pick up again.
Sugar price bounced off the downward trendline and is approaching major resistance at $16.52. In case the current sentiment prevails, price may move towards the $17.82 level. On the other hand, if sellers manage to halt advances at $16.52 another downward swing may start. Local support lies at $15.14. Source: xStation5
