Sugar finds support, as markets consider the upcoming El Nino

Sugar finds support

Grain Futures bounces back right after a bearish market session, while sugar found some support after an early sell-off. Cotton futures eased, while the U.S. Department of Agriculture revoked their ideas of the world production.

As expected the USDA lifted its forecast for the U.S. cotton exports in response to strong exports sales last month. Exports were seen at 14.0m bales, which were up by 800,000 tons from last month.

In result, ideas of ending stocks for 2016-2017 were up by 3.7 million bales but the USDA lifted its idea of world cotton production and ending stocks, with ideas of the Chinese and Brazilian crops lifted.

Sugar markets were pushed forward after May raw sugar futures were down by 2.5% early in the session. Markets are considering the possibility that an El Nino may occur this year, which could potentially disrupt the Indian Monsoon.

Tom Kujawa, a representative from the Price Futures Group, stated that  "The sugar bulls will point out there is still a predicted 50/50 chance of an El Nino pattern in the second half of the year and betting short on benign weather so heavily across AGS are 'brave',"

There are also underlying concerns that the cane crushing may delay due to the rainy forecast in Brazil. But Toby Gorey, a representative of the Commonwealth Bank of Australia, turned down the negatives statements and even believes that the Rainy forecasts may play towards the harvests advantage.

 Mr. Gorey noted that the Delay “Might well increase sugar production given rainfall takes a more seasonable turn because more crushing might be done when sugar recoveries are higher"

May raw sugar finished up 0.5%, at 16.72 cents a pound.

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