Sugar Market Bullish as Brazil Production slow-down projected

This week’s bullish trend in sugar prices continued. Sugar prices have hit an almost four-month high this week as traders speculated that Brazil would miss its production target.

Brazil produces almost one quarter of the world’s sugar production and accounts for more than half of global exports. The South American country has been hit with severe drought problems in its major sugar growing region, which has so far seen a 25% decline in production this season compared to the same period last year. To take advantage of the surge in global sugar price and the smaller Brazilian crop, an Indian ministerial panel last week allowed an additional 500,000 tons of sugar to be exported by the local sugar industry, which is above the export quota for 2011.

The late harvest of sugar this year in Brazil, drought problems and increased demand for sugar, as reflected by the increase in US’ annual-import quota, is helping to keep sugar prices elevated. The sugar crop in the US was severely affected this year by unfortunate weather conditions that hit the country and saw supply drop.

source: marketmoves