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Sugar Joins Agriculture Rally

July 20, 2012 at 18:16 by Andriy Moraru

Sugar is currently demonstrating its fastest daily rally since June 27. While there is no critical danger for sugar production that can be compared to the drought affecting the growth of grains in North America, the commodity is gaining as more investors become bullish on the agricultural sector overall.

Heavy rainfalls in Brazil, which is the world’s biggest sugar producer and exporter, threaten the size and quality of crops there since June. Although this factor can be considered as short-term and local, it can be clearly seen on the chart in a form of rally that has started back on June 5.

The other big sugar producer, India, which is holding world’s number 2 spot for the commodity output and number 3 as an exporter (following Brazil and Thailand), is experiencing a certain lack of precipitation in the cane-growing areas. This factor, though not very strong, is helping the sugar prices rise as the seasonal demand is growing due to the beginning of the Ramadan celebration in Muslim world.

Of twelve commodity traders and analysts surveyed by Bloomberg news agency today, seven expect sugar to be bullish, four — bearish, and one expects prices to hold near the current levels next week.

Sugar rose from $0.232 to $0.2395 per pound as of 18:11 GMT on ICE today, demonstrating fourth strongly bullish week in a row. It has also reached its highest level since April 13 earlier today.

If you have any questions and comments on the commodities today, use the form below to reply.

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