NEW YORK—Sugar futures are seeing renewed buying interest this week, following a stagnant period, as news of a large physical order for sugar on Monday sparked the sentiment that demand for the commodity could be better than expected, and this caused an influx of trading interest.
On Tuesday, US sugar futures climbed over 1.5% their second day of advances. Note that on Monday ICE sugar futures soared 3.3% to settle at 20.42 cents per pound as news of the large order hit. Sugar trade has been subdued for some time now, with lack of fresh physical drivers and the indication that demand was waning sugar’s recent performance has been anemic. Also, complicating matters has been mixed data on the state of sugar production in Brazil.
The large physical order followed the overnight data from China that its July sugar imports declined 14% year-over-year. Still, imports were the highest monthly level since December, and were up compared to the prior month. Overall, the data is not that bearish considering that China’s sugar imports have slowed this year, as expected, after the country went on a buying spree last year to capitalize on lower sugar prices. Sugar prices have since ascended this year, and this is curbing China’s demand for new sugar. Also, the country has an estimated 7 million metric tons of sugar in its state reserves. Imports are expected to be slow in the coming months.
Source: www.economiccalendar.com