Yesterday, the price of the sugar futures declined down to 17.7 cents per pound. The price is still going down. In general, the factors driving the market haven’t changed or gone anywhere. The major driver is overproduction around the globe. Still, the surplus is not as big as last year.
The chart below, courtesy of the Commodity Trading Department of Masterforex-V Academy, reflects the current state of affairs in the market of sugar:
Bearish Drivers
On top of the excessive production of sugar worldwide, there are some other factors that exert pressure on sugar prices in mid-term perspective:
The sugarbeet harvesting campaign in the USA is nearly over.
China, the world’s second biggest consumer of sugar, may well start tapering its sugar-importing campaign. These efforts have cost the Chinese government over $3bn over the last 2 years.
The holiday season is India is nearly over, which will lower the domestic demand for sugar.
The Brazilian Real and the Indian Rupee have depreciated a little bit against the US Dollar, which exerts extra pressure on the prices.
Bullish Drivers
Major sugar traders are planning to close their businesses due to low sugar prices. This will lead to a drop in sugar supply.
At the same time, some major refineries in China, India and Brazil may also see closure in the near future.
At the same time, Thailand, the world’s 2nd biggest exporter of sugar, is expanding its sugar export.
Trading Recommendations
According to Masterforex-V Academy, the market of sugar currently presents no interest to option traders.
