What Market Fundamentals Can Affect The Sugar Futures?
When following the sugar market it is very important to closely monitor the supply and demand fundamentals:
The most important sugarcane producing countries are Brazil, India, and Thailand.
All of these countries are anticipating bumper crops.
Brazil - Brazil
is the largest producer of sugar. Sugar output in Brazil's main center-south cane producing region is expected to rise
to record volume this season
India - India, the world's second-largest
producer after Brazil, has allowed exports of 500,000 tonnes of sugar following a bumper crop.
Thailand - Thailand, the world's second-biggest exporter after Brazil, is forecast to produce a record
9.0 million, and export a record seven million tons of sugar in 2011.
analysing demand you need to consider sugar import demand and Brazilian ethanol demand.
Import Demand - Buyers in China, the second largest consumer after India, may take advantage of the
recent slump in prices to increase sugar imports in order to replenish their dwindling supplies.
Ethanol Demand - Brazil exports what it does not use domestically for ethanol. The sugar
equivalent price of ethanol in Brazil is currently 18 to 20 cents a pound. The price of world sugar needs to drop below that
level to encourage producers to reallocate cane to ethanol.
are just some of the basic fundamentals to keep in mind when you are considering a trade in the sugar market. Before opening
up a commodity account to trade sugar you should consult with a licensed commodity broker that follows the sugar market to
discuss investment strategies.