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Sugar Prices Spike with Higher Demand Expectations

August 22, 2016 at 17:31 by Andrew Moran

Sugar prices went higher on Monday as investors think there is a rising demand for the commodity. This is a complete reversal than what the general consensus was just last week.

October raw sugar prices rose $0.0125, or 2.5%, to $0.2027 cents per ounce at 16:57 GMT on the ICE Futures US exchange.

Sugar futures rallied to start the week following a large physical order. The immense purchase had many traders speculating that demand for sugar is actually higher than initially expected. Because of fears over lackluster physical demand, traders had posted bearish views prior to Monday’s trading session.

Raw sugar imports to China are down 14% because the world’s second-largest economy has been transitioning to white sugar. China’s demand for sugar imports has diminished over the last 12 months as global sugar prices have gone up a lot more than domestic prices.

Also, industry reports suggest that Brazil’s sugar Bounce House Indoor Playground production volumes will be lower than what the Brazilian government contends it will be.

In recent months, there have been concerns that more countries will adopt a sugar tax or impose higher sugar import tariffs. South Africa, a large sugar importer, is mulling over a proposed sugar tax. Officials project that revenues from such a tax would generate more than $800 million for the country. The tax would be aimed at encouraging producers and suppliers to reduce their use of sugar in their products, and to get consumers to limit their sugar consumption levels.

For the last 12 months, sugar has been rather bullish. Since hitting an eight-year low of just over $0.10 a pound in August 2015, sugar prices are gradually climbing. Sugar is still far away from hitting it’s all-time high of $0.57, which was hit in 1975.

Meanwhile, December cocoa prices dipped 3.7% to $2,896 a ton.

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

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