Sugar Futures Prices Strengthen on Sweet Weather

August 25, 2016 6:57AM CDT

Sugar futures prices are strengthening as favorable weather conditions and the upcoming festival season in India boosts the commodities futures product.

The October contract in sugar futures was up .45 percent to $20.32 after reaching an earlier high of $20.76 on Thursday. Earlier in the week, the commodities futures contract dropped as an excess of supply combined with weak demand took a toll on the spot market product.

Adversely, India’s sugar production is estimated to decline to 25 million tonnes in the 2015-16 season (October-September) from 28.3 million tonnes in the previous year. The outlook for the next year estimated to fall to 23.26 million tonnes. However, the industry body ISMA feels that there would be sufficient sugar stock to meet the domestic demand of 26 million tonnes as the country would have an opening stock of 7 million tonnes.

India’s Finance Minister,  Arun Jaitley, held an inter-ministerial consultation earlier in the week discussing a ban on sugar futures trading to avoid speculation and keep prices of the sweetener in check during India’s popular summer-to-fall festival season. His comments have faded somewhat by commodities futures traders in favor of weather concerns in the softs commodities futures sector.

Meanwhile, in the U.S. commodities futures markets are absorbing the day’s data. Weekly Jobless Claims fell 1,000 to a seasonally adjusted 261,000 for the week ended Aug. 20, according to the U.S. Department of Labor Department. It was the third straight weekly decline in claims. The majority of economists forecast the report to jump 265,000 in the latest week.

Durable Goods Orders, excluding aircraft, increased 1.6 percent in July, according to the U.S. Department of Commerce, and the second consecutive month of increases. Economists had predicted the report to rise 0.3 percent last month.

Commodities futures markets participants are mostly awaiting Friday’s speech from U.S. Federal Reserve President Janet Yellen, which is expected to offer an indication to the central bank’s plans for an interest rate hike. Her comments typically affect most sectors within the commodities futures markets.

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