Highlights points related to raw sugar futures in the US
Price Decline: Raw sugar futures in the US experienced a decline, falling below 26.8 cents per pound. This marked a halt in the recent rally that had pushed sugar prices to a 12-year high of 27.5 cents on September 19th.
Similar Movements to Oil Benchmarks: The movement in sugar futures was mentioned to be tracking similar movements in oil benchmarks. This suggests that broader economic and commodity market factors were influencing sugar prices.
Impact of Fuel Prices on Sugar Production: There were concerns that the rising prices of fuel were influencing the decision-making of cane crushers. The worry was that higher fuel prices might lead them to allocate more sugarcane crops to biofuel blending rather than raw sugar production, potentially affecting the supply of raw sugar.
Year-to-Date Price Increase: Despite the recent decline, sugar prices were still noted to be over 30% higher year-to-date. This indicates a significant price increase in the sugar market.
Worries about Lower Exports in India: One of the factors contributing to higher sugar prices was concerns about lower sugar exports from India. Insufficient rainfall in India’s key producing states was mentioned as a factor exacerbating poor growing conditions for the next season’s crop.
Drought and El Nino Concerns: The current drought in India added to concerns that the El Nino weather pattern might prolong dry conditions, leading to reduced cane yields. This situation could potentially prompt the Indian government to limit sugar exports in an attempt to control elevated food inflation within the country.
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