Commodity traders and investors from around the world keep monitoring Brazil’s sugar forecasts. On May UNICA (Brazilian Sugarcane Industry Association) downgraded the forecast for the sugarcane harvest by 1 million tons as compared to 2010.
According to the forecast the production of sugar in Brazil, the world’s number 1 exporter of sugar, may see a rapid decline due to poor weather conditions and the ageing of sugarcane plantations, thus causing a rally in the market of sugar.
Nevertheless, UNICA predicts that in the 2011-2012 marketing year Brazil’s sugarcane harvest will reach 568.5M tons, thus leaving the country the world’s number 1 (23.7% of the global production of sugar). The market of sugar keeps being influenced by external factors. Moreover, speculative sentiments push sugar prices up, even though right now there are few buyers.
According to the Department of Commodity Trading of , technically, the market of sugar is about to see a volatility decline along with higher trading volume, which may lead to an intensive price movement (either upswing or downswing). As the price is currently above the 50-day MA there is a chance of a rally up to the level 32. However, the upward potential is restrained by fundamental factors.
