Sugar is an important product used by more than 6 billion people every day. It is used at home and in industries which manufacture confectionary, food products, and beverages among other products. Most of the world’s sugar is produced in countries like Brazil, India, China, and Thailand. Sugar manufacturing process is often expensive and often, most of the firms that produce it are not profitable. As a result, the industry is highly subsidized and there are many treaties on its export and import.
The price of sugar fell three years ago, reaching a low of 10 cents per pound. As the price fell, sugar producers reduced their acreage and the supply. As a result, the price started to rise, reaching a high of 23 cents in 2016. This week, the price of sugar reached a significant low of 9 cents per pound.
This is the main foundation for agricultural commodities trading. When the price falls, farmers tend to move to other crops. This creates scarcity in the crop and the price rises. As the price rises, more farmers move into the crop, creating more supply. The price then falls. It is for this reason that the agricultural crops are said to be cyclical in nature. In the latest WASDE report, the department of agriculture said that supply in the sugar sector was rising.
Sugar has reached 10.18 cents per pound. This price is below the 50 and 25-period moving average as shown below. Its RSI is at 32, which is close to the oversold level. The current low is the lowest the price of sugar has been in more than five years. Ultimately, the low price may lead to a lower supply, which will may cause the price to move up..