Sugar Futures seem to come down according to speculators who vie for the fact that dry weather conditions across the world’s largest sugar producing country has accelerated the harvesting thus increasing the supplies. Sugar prices that had gone up since June 9 following news of continuous rainfall from May to June can see a bearish trend according to the speculators as weather conditions get normal around the country that will make cane harvesting very much favorable.

Sugar prices rose as much as 27% since June 4 on the ICE Futures US exchange. Rainfall in South America hindered the sugar harvesting across various regions of Brazil and Australia which slumped the global sugar supply resulting a rally in sugar prices that remained low for the past 21 months.  Prices also jumped in the several past weeks following the Indian Meteorological data that concluded precipitation decreased by 22% which could narrow the sugar cane production in the second largest sugar producing nation.

Sugar traders have mostly taken a bearish position which is the highest number of short positions in three months.  Previously, it was on April 13 that the market saw the highest proportion of bearish traders according to the CTFC report.  Weather conditions will remain very favorable for harvesting across the sugar producing nations that would include not only Brazil but Australia, India and Thailand as well according to the meteorological departments of the respective countries. Thailand and Australia are the second and third largest sugar exporters respectively. Brazil, the largest sugar producer and exporter saw a 2% raise in the sugar output level in the first half of this month. Drier weather conditions across South America is helping the producers to catch up with their cane harvesting that will help increase the global supplies thus keeping pressure on the sugar prices.

According to the US department of Agriculture, global sugar stockpiles will reach 31.6 million metric tons by the end of 2011-2012 seasons; a four year high record. Also the sugar output for 2012-2013 is to exceed the demand by 8.4 million metric tons according to the department.  From the data of these makes it looks like sugar prices can make new records very soon.

 Note: The blog is just an expression of the author’s opinion and cannot be deemed responsible for any losses incurred.