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Why Did Sugar Prices Fall for the Third Consecutive Day?

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Trend for sugar prices

Sugar prices for March futures contracts were trading near the key support of $14 per pound on January 26, 2016. Prices fell for the third straight trading day on January 26. The downward price movement continued. Sugar prices are expected to fall more. Prices could challenge the crucial support level. The open interest fell slightly by 0.40% on January 26. Prices were below the key moving averages on the day.

The above chart suggests that prices could be $13.5–$14.5 per pound in the short term.

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Price drivers

Higher production cues for sugarcane and sugar output from Brazil supported the sugar supply on January 26, 2016. Favorable weather expectations added to the sentiment.

Amid lower petroleum prices, lower ethanol demand supported sugar prices on January 26, 2016. The US dollar depreciated by 0.26% on January 26, 2016. It hurt the sugar import sentiment.

Stocks review

The downward movement in sugar prices had a negative impact on sugar producing and trading businesses. However, it supports the companies that use sugar as a material input. Hershey (HSY) rose by 1.6% on January 26, 2016. It recovered from a fall the previous day. Cosan (CZZ) didn’t change on January 26, 2016, from the previous day close despite a fall in sugar prices. Campbell Soup (CPB) and General Mills (GIS) rose by 0.99% and 0.60% on January 26, 2016. They rose from the fall the previous day. The iShares MSCI China Index Fund (MCHI) rose by 0.68% on January 26, 2016.

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