Time running out’ for sugar price downturn
Investors should tread warily in banking on an extended slide in sugar prices, given the threat of production threats outside Brazil, and the potential for Chinese buying, banks said – even as futures fell to a two-year low.
Raw sugar futures, which on Wednesday extended their decline of some 20% since late July, look set to stay depressed for now, given the attention being paid to the pick-up in the cane harvest in Brazil’s key Centre South region, after rain delayed start to the season.
“The market appears to be focusing solely on the news of growing supply from Brazil,” Commerzbank said, meaning that forecasts of a drop in Indian supplies, thanks to a weak monsoon, were offering “no effective crutch for the price”.
On the demand side, China offered a potential support for values in the offing, with the National Development and Reform Commission signalling that it was prepared to act after domestic prices fell below a “reasonable” level.