The Brazilian real maintained its measured decline by falling to Brl 2.8786 per U.S. dollar to start the week. The latest slide has cheapened the value of the country’s export to the least since 2004. As the value of the domestic currency loses value, commodity investors grow increasingly impatient with physical products priced in U.S. dollars. Accordingly, the price of sugar continued its slide on Monday, to reach 14.12 cents per pound and the weakest traded price for the May futures contract traded on ICE Futures in New York.
According to Judy Ganes of J. Ganes Consulting LLC, there are no reasons to be bullish on sugar prices – one of Brazil’s major exports. The sugar market is one notorious for back-to-back surpluses, which is unlikely to change in the current crop year. In her latest webinar with interactive Brokers, ICE – Soft Commodity Markets – Facts and Analysis, Judy explained how the weakening real was providing additional pressure on the sugar market as the domestic economy remains in the doldrums. In addition, a slower economy is likely to mean that sugar typically diverted to ethanol production for gasoline production is more likely to end up as an export, weighing even further on prices.
Chart shows May sugar prices hit a contract low in Monday trading.