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Sugar Futures Rally on US Thanksgiving Holiday, Surge 2%

November 23, 2017 at 17:39 by Andrew Moran

Sugar prices are trading higher as US markets are closed for the Thanksgiving holiday. The white commodity rallied as high as 3% on Thursday before paring some of those gains. Sugar is still on track to finish Thursday on a high note.

March sugar futures rose $0.0037, or 2.49%, to 15.25 cents per pound at 16:16 GMT on Thursday on the US ICE Futures exchange.

Sugar prices are pushing higher as more producers are converting cane to ethanol, which is also prompting many growers to reduce output levels. Analysts say that investors are betting that new policies in Brazil will incentivize more consumption of renewable fuel. This means that growers will convert more cane to ethanol and shift away from sugar.

In Brazil, higher gasoline prices could encourage greater use of fuel ethanol than sugar. It should be noted that the trend may have little impact in the short-term because the season’s cane production is starting to come to an end in Center-South Brazil.

Despite the impressive gains in 2017, market experts are expecting a decline in sugar prices over the next six months. Some are projecting sugar futures will plummet to around 14 cents a pound.

According to Rabobank, a Dutch multinational banking and financial services company, the market is anticipating that cotton will be the best performing soft commodity in 2018, while sugar is being projected as the worst.

We expect a muted supply-side response, given the level of protectionism in areas like the European Union, Pakistan, China, and India.

Last month, the International Sugar Organization (ISO) forecast that output will be higher than demand by roughly 4.6 million tons with supplies topping a record high of 180 million tons.

Other commodities remained relatively quiet on Thursday. March coffee futures rose $0.02, or 0.16%, to $1.268 per pound. March wheat futures were unchanged at $4.407 per bushel. March corn futures were also unchanged at $3.57 per pound. March cotton futures jumped $0.09, or 1.28%, to 71.04 cents a pound.

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