Sugar was trading close to 10 cents a pound last summer, with the world drowning in sugar, and crop prospects encouraging.
Now the heavy rains in important growing areas in Brazil have affected every stage of the sugar crop: the harvest has been forced to slow down; the cane cannot be crushed; and the boats are sitting idle, waiting to load. There are approximately two million metric tons of sugar waiting to be loaded, but as shipments are being suspended, the price is now trading close to 19 cents a pound. Add to that the rising demand for the product, and we have the makings of a bull market.
The Sugar No. 11 contract, traded on the ICE exchange, is the world benchmark contract for raw sugar trading. The contract prices the physical delivery of raw cane sugar. Though as AvaTrade customers we don’t actually take delivery of the underlying commodity, we must be aware that the price of sugar will be affected by the complexities of the sugar delivery process. It is one reason why AvaTrade rolls over the CFD contracts in a timely manner.
Source: www.investing.com