Sugar May Not Be A Sweet Investment For Bulls Anymore – Strong Correction From 4 Year Highs
Sugar prices have dropped in three out of the last four trading days and may slide further as an overblown market which sent sugar to four-year highs is tempting producers and sapping demand.
Thanks to the rally in sugar which stated in August 2015, production in major exporters is witnessing an explosion. Australia – the world’s third biggest sugar producer – is expected to increase its exports by 4 million tons in 2016/2017.
The world’s largest sugar exporter, Brazil, is forecast to export over 27 million tons in spite of a disappointing cane harvest in the Central/Southern regions. As prices are around multi-year highs, mills have been prioritizing sugar over ethanol production.
Against the backdrop of rising supply, demand for imports in China, the world’s biggest importer of sugar, is expected to fall below earlier forecasts. Chinese sugar imports are expected to decline by 1.9 million tons to a total of 6 million tons in 2016-17, due to high prices and an improvement in domestic production.
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