• Home
  • Cryptocurrencies
  • Stocks
  • Commodities
  • About
    • Code of Ethics
    • Risk Warning
    • Privacy Policy
  • Contact
rkdream

Type and hit Enter to search

  • Home
  • Cryptocurrencies
  • Stocks
  • Commodities
  • About
    • Code of Ethics
    • Risk Warning
    • Privacy Policy
  • Contact
sugar price
Commodities

Sugar price forecast after dropping below a pivotal level

Faith Nyawira
Faith Nyawira
July 5, 2022 2 Mins Read
29 Views
0 Comments

Sugar price is hovering around the previously steady support zone of 18 cents per pound. The sugar #11 futures, the global benchmark for raw sugar trading, has been on a decline since mid-May after bulls lacked enough momentum to sustain the rebound past the resistance level of 20 cents. Since then, the commodity has dropped by over 10% to trade at its lowest level since the beginning of March. As at the time of writing, it was at 17.93; down by 0.77%.

Fundamentals

Weakening in the value of  the Brazilian real is one of the aspects behind the plunge in sugar price. Notably, the emerging market currency has a direct correlation with commodity’s price.

 As the US dollar rallies to its highest level since December 2002, BRLUSD is trading at its lowest level since late-January 2022. As at the time of writing, the latter currency pair was at $0.1849; down by over 13% since late May.

Brazil is the leading producer and exporter of sugarcane globally; supplying about 50% of the world’s produce. Similar to other commodities, sugar is priced in US dollars. At the same time, production costs are in Brazilian real. As is currently the case, a decline in the value of the real lowers production costs while reducing the amount of dollars that the commodity fetches in the market.

The easing in the rally of crude oil price has also contributed to the bearish sugar price outlook.  Ethanol demand has a direct correlation with crude oil price based on its status as an alternative fuel. As at the time of writing, Brent futures had plunged to its lowest level since mid-May at $102.02. At the same time, the benchmark for US oil – WTI futures – were at $98.26. The latter has dropped below the psychological level of $100 per barrel for the first time since 11th May.

Just as corn is the main source of ethanol in the US, Brazil usually uses sugarcane to produce the alternative fuel. Indeed, it is the second-largest producer of ethanol after the US.

Sugar price technical analysis

Sugar price has dropped below the pivotal level of 18 cents for the first time in about four months. As shown on a daily chart, it is trading below the 25 and 50-day exponential moving averages. Besides, it is at the periphery of the oversold territory with an RSI of 30.

Based on these technical indicators, coupled by the fundamentals, I expect it to remain under pressure in the short term. In particular, the support zone at 17.84 is worth watching in the immediate term. With a further decline, sugar price may drop to its lowest level since late February at 17.57.

On the flip side, a corrective rebound may have it find resistance at 18.33. Even so, I expect it to remain below the crucial support-turn-resistance zone of 18.50.

sugar price
sugar price

Related

Share Article

Faith Nyawira
Follow Me Written By

Faith Nyawira

Faith Nyawira is an experienced financial analyst with over 10 years in the industry. She started her trading career while in college. Over the years, she has worked for some of the leading financial websites like iNvezz and InvestingCube. She graduated with a Bachelor’s degree in 2013. Faith lives in Nairobi and likes spending time with her son. She is an avid golf and Formula 1 fan.

Other Articles

Bitcoin
Previous

Crypto Crash Explained: In-Depth Look at Why Crypto Prices Crashed

Next

Sage Group Share Price is Extremely Cheap. More Upside?

Next
July 6, 2022

Sage Group Share Price is Extremely Cheap. More Upside?

Previews
July 5, 2022

Crypto Crash Explained: In-Depth Look at Why Crypto Prices Crashed

Bitcoin

No Comment! Be the first one.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

rkdream

rkdream is a fast-growing financial website covering the latest news and analysis on cryptocurrencies, stocks, and commodities.

Quick Links

  • About
  • Code of Ethics
  • Risk Warning
  • Privacy Policy

Categories

  • Cryptocurrencies
  • Stocks
  • Commodities

Follow Us

Twitter

© 2022, All Rights Reserved.

  • Cryptocurrencies
  • Stocks
  • Commodities
Manage Cookie Consent
To provide the best experiences, we use technologies like cookies to store and/or access device information. Consenting to these technologies will allow us to process data such as browsing behavior or unique IDs on this site. Not consenting or withdrawing consent, may adversely affect certain features and functions.
Functional Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes. The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
Manage options Manage services Manage vendors Read more about these purposes
View preferences
{title} {title} {title}