Sugar Prices Fall to 4-Month Lows



Trend for corn prices

Sugar prices for March futures contracts fell sharply on January 28, 2016. The downward price movement continued for the fifth-consecutive trading day on January 28. Prices breached their key support level of $13.5 per pound.

Sugar prices continued to trade below key moving averages on January 28. Prices fell to a four-month low, with this being their longest slump since September 23, 2015. Sugar prices have lost the confidence of the hedge funds and speculators and could further drop.

The chart indicates that prices could continue in the range of $12.5 and $14.0 per pound in the short run.

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Price drivers

Net long position hedge funds and speculators were influenced to sell by bearish expectations and a lack of bullish support on January 28, 2016. Anticipations of corn-based sweetener competing with sugar in South American countries negatively affected sugar’s price on the same day.

The US dollar fell by 0.03% on January 28, 2016. A lower US dollar was adverse for sugar imports, keeping sugar prices higher on the day.

Stocks review

Lower sugar prices support sugar confectionery businesses, as their costs are reduced. With the fall in sugar prices on January 28, 2016, Cosan (CZZ) rose for the second trading day by 5.6%. Campbell Soup Company (CPB), The Hershey Company (HSY), and General Mills (GIS) rose by 1.3%, 3.0%, and 0.49%, respetively, on January 28, 2016, and recovered from the previous day’s fall of 0.27%, 0.76%, and 0.34%.

The iShares MSCI China Index ETF (MCHI) rose by 0.90% on January 28, 2016, but could not recover from its previous day’s fall of 1.5%.


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