Global sugar prices have been gradually declining since early 2011. In particular, in February 2011, the price of sugar reached the high at 36,08 cents per pound while in lat 2013 the price is down by 50% and is trading around 17-18 cents per pound, Market Leader reports.
The oversupply of sugar is seen as the key reason for the price weakness in the global sugar market. Still, the tendency is likely to continue since the oversupply still exists.
The global market of sugar is currently seeing an interesting tendency. 2,5 years ago, the price started declining and reached the bottom at 16,7 cents per pound in July 2013. The reason is the same – the excessive supply of sugar worldwide.
At this point, the situation hasn't changed dramatically. Multiple agencies are report that the surplus is still present. The International Sugar Organization is predicting the surplus around 4,5 million metric tons of sugar in the 2013-2014 marketing year.
The current bias is bearish. The price is trading around 16,92 cents per pound. The chart below, courtesy of Masterforex-V Academy, reflects the current state of affairs in the market of sugar:
Bullish factors:
The Indian farmers and refineries still cannot agree on the price on sugarcane while the harvesting campaign is underway. The government may impose sanctions on them if the refining process doesn't start till December 7th since sugarcane cannot be stored for a long time. It needs to be refined as fast as possible.
The beetroot harvesting campaign in Ukraine is lagging behind last year's campaign by 44%.
Bearish factors:
The USDA has published another global sugar market report. The report indicates that the forecasts (production, storage etc) have been raised.
Thailand has also started its sugarcane harvesting campaign this week.
The UNICA has reported on the first two weeks of November. The sugar production in the Central-South region of Brazil reached 1,96 million metric tons during the reporting period. At the same time, the Brazilian Real is down against the US Dollar, which favors sugar export and exerts extra pressure on sugar prices worldwide.
