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Sugar Futures Finish Up 2% As Investors Confident of Rebound

November 22, 2018 at 20:41 by Andrew Moran

Sugar futures closed the trading session 2% higher as investors appear confident that the agricultural commodity will rebound heading into 2019. The strong performance comes as new industry data found that India will surpass Brazil as the world’s biggest producer of sugar.

March sugar futures surged 0.23 cents, or 1.85%, to 12.69 cents per pound at 19:11 GMT on Thursday on the ICE Futures exchange. Sugar prices have had a rough 2018, cratering nearly 20%, but they are on track for a weekly gain of 0.3%.

The global sugar market is benefiting from data that found the major producers, including Brazil, the European Union (EU), and Thailand, are lowering their output forecasts. This would alleviate the international supply glut that has plagued the market for years. Overall, global output is expected to decline 4.5% to 185.9 million tons, down from earlier forecasts of 188.3 million.

As other nations begin decreasing their production, India is becoming an immense power player. In fact, with India raising production by 5.2% to a record high of 35.9 million metric tons amid increasing acreage and boosting yields, the Asian nation will surpass Brazil. The South American nation’s output is projected to fall 21% to 30.6 million tons due to poor weather conditions and a shift to cane-based ethanol.

Meanwhile, some are bullish on sugar because they believe it will rebound as the market balances out.

Phil Hogan, the EU agricultural commissioner, told reporters that the elimination of sugar quotas last year and the recent data he has examined suggest “prices will continue to increase.”

Despite signs of recovery in 2017, when it topped 20 cents a pound, sugar has yet to reach the 2011 peak of 33 cents. Since 1920, the highest sugar prices have ever been was 57 cents, back in the late 1970s.

In other agricultural commodities, January soybean futures rose $0.052, or 0.59%, to $8.88 a bushel. December wheat futures dipped $0.72, or 0.14%, to $4.98 per bushel. January coffee futures shed $0.035, or 0.32%, to $1.10 per pound. January orange juice futures surged $0.08, or 0.57%, to $1.41 per pound.

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