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Sugar Leads Agriculture Commodities in Rally of Its Own

September 29, 2011 at 17:54 by Andriy Moraru

The sugar futures managed to pare their recent losses and reach the highest level in more than a week today amid the positive market sentiment. It’s based on the German approval of the additional powers for the eurozone bail-out fund, better fundamental reports from the United States and the increasing expectations of poor sugar production in Brazil.

Brazil is holding the worlds leadership in sugarcane growing with about 37 percent share of the global industry. News of the decreased sugarcane crops in this country due to the bad weather conditions have inspired the market last Friday. Now the seeds of these speculations have fallen on a fertile soil of the global market optimism.

German Bundestag approved the extra rights for the European Financial Stability Facility — the eurozone bail-out fund. The new functions will include buying bonds on the secondary markets, recapitalization of the banks and issuing the precautionary credits. This will most likely help to contain the European debt crisis, increasing the global demand for commodities.

The US statistics played its role in the rise of sugar prices today — last week’s unemployment claims turned out to be about 7 percent lower than the median forecast of the economic strategists was showing. Additionally, the second quarter of 2011 GDP growth figure was revised positively in the United States. These factors added to the reasons for the bull markets today.

Sugar futures contracts with September 30 delivery rose from $25.62 to $27.08 for 112 pounds or about 5.7 percent as of 17:47 GMT today. The highest intraday level was at $27.64 — commodity’s maximum price since September 21.

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