As weather becomes more and more unpredictable it starts having an increasing impact on agriculture around the world. Global warming, anthropogenic and natural disasters, monsoons and droughts affect seasonality and causing instability.
In particular, Brazil’s sugarcane crops were damaged by continued heavy rains. A delay in the monsoon season in India may have a disastrous impact on its sugarcane crops this year. Australia keeps suffering from heavy rainfall while the USA is suffering from a severe drought. Droughts and heavy rains are torturing Europe.
The Indian government has introduced quotas for sugar exporters on condition that they will sell at least 4.5 million tons in the domestic market. Sugar is the only the export of which is controlled by the government. Next marketing year, which will start on October 1st 2012, India’s sugar production is expected to reach 25 million tons while its domestic consumption is expected to be around 22 million tons.
The key to the near-term moves in the market of sugar lies in Southern end Central Brazil. Over 90% of the country’s sugar producers are concentrated here. In the second part of June, they refined 35 620 00 tons of sugarcane, which is a +18% increase as compared to June 2011.
According to the Commodity Trading Department of , on June 4th, the Daily chart showed us the market bottom around 18.84, thus indicating a major level of support for sugar prices. However, despite the recent rally, which is considered to be just a recovery move, the downtrend is still underway.
The ICE sugar contracts for October delivery are now being traded actively. During the latest trading session the contract appreciated by 16 cents up to $22,95 per pound (or $505 per ton).
