The tropical countries are starting another season of sugarcane harvesting. The focus is on India and Brazil – the world’s major sugarcane producers.
The harvesting season in Brazil is delayed because of heavy rains. At the moment the delay is not considerable. However, further rains may aggravate the situation, thus affecting the global prices.
Unlike Brazil, India has its optimistic forecast confirmed. The production of sugar is going as expected. It should be noted that the latest export supplies from India were made under some pressure of the importing countries. The neutral sugar balance is the factor restraining the price growth.
The global seasonal tendency of sugar prices is downward. The downfall should continue till mid-fall, if there are no global fundamental changes. The key level is $0.3.
From the standpoint of the VSA method, we can see a struggle between the supply and demand. There is a descending triangle pattern. The direction of further price movement will be determined by the direction in which the price comes out of the triangle and consolidates beyond its boundaries
Taking into account the seasonality and the neutral balance, one can conclude that overcoming the level of $0.3 is unlikely.
We expect a downward tendency.
