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Sugar Futures Jump on Bargain Buying, Strong Demand

April 11, 2017 at 17:04 by Andrew Moran

Sugar futures are climbing on Tuesday as investors participate in bargain buying. Traders are also pleased that there is a strong physical demand for the commodity. This comes in the wake of the Indian government’s decision to allow duty-free imports of raw sugar.

May sugar futures rose $0.09, or 0.54%, to 16.72 cents per pound at 16:35 GMT on Tuesday on London’s ICE Futures exchange. Sugar is now trading at its lowest level since May 2016. Year-to-date, sugar prices have cratered more than 13% on concerns over a global supply glut.

After starting off the year strong, the commodity has been tumbling since the end of February. Investors now expect sugar prices to trade sideways for the rest of 2017.

Sugar prices are inching a bit higher on Tuesday as investors seek out bargains in the commodities market. Sugar is also benefiting from reports that there is commendable physical demand from bulk buyers, which could help weaken supplies in the international market.

Last month, reports suggested that sugar production may decline by 19% in the 2016–2017 sugar year because of heavy rainfall from the devastating monsoon that impacted states like Maharashtra and Karnataka.

The sugar market was rocked by the announcement that India would permit the imports of 500,000 tonnes of duty-free raw sugar.

The sugar industry is also paying attention to the United Kingdom. A March 2017 report from Public Health England (PHE) shows that British public health officials want the food industry to reduce its sugar consumption by 5% this year and another 20% in 2020. By taking on this challenge, corporations would demand fewer amounts of sugar for their biscuits, chocolate bars, and cereals. If the food industry did take on this challenge then an estimated 200,000 tonnes worth of sugar would be eliminated from the UK market each year by 2020.

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