Weak Demand; Trade Uncertainties Hold Down Sugar Price

by John Knobel



  • Sugar price last week closed its longest run of weekly losses in more than two years;
  • Sugar price down -12% last 30 days;
  • The U.S.-China trade war is raising concerns about demand for soft commodities, including sugar

Sugar Price Drivers

  • The main sugar producers are set for good harvests, but demand is looking less promising as fears of a slowdown in global economic growth hit markets;
  • India a major Sugar producer, according to Bloomberg will produce 30 million tons of sugar this year,  adding to potential downside price pressure for sugar if India's Sugar exports fall short;
  • The Brazilian currency the Real;  continues to be weak;  this may act as a support for demand as foreign Buyers can expect to pay a lower cost on the back of a weak Brazilian currency;
  • Brazil will also probably have a good crop year but demand is very poor as consumption trends in Brazil and rest of the world on the decline;
  • Soft commodity investors/traders will be closely following the US Fed’s annual summit in Jackson Hole of Friday;  any indication of a more aggressive interest rate policy (lower US interest rates) to hold off the  possibility of a potential deep recession may cause  high price action in the commodities  markets;

Source: FXGM / Bloomberg