March ICE Sugar futures posted a significant upside move in Friday’s session, closing at 13.1c/# (+5.48%). Crude oil futures gained (WTI +2.48%) . See what we discussed last week re: Brazil’s current supply-side and ethanol discussions at play here. Higher crude prices -> higher ethanol demand -> sugar/ethanol split favors ethanol over sugar -> tighter sugar supply. Unica (Brazil’s sugarcane industry association also released this week that the 2018/19 marketing year Centre-South production was down more than 26% year on year. Further, only 35.4% of cane was used for sugar, down from nearly 47% in 2017/18 MY.
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Disclosure: At the time of this writing, I own no ETF/ETN products related to sugar, ethanol, or derived products. At the time of this writing, I do own shares in ADM, which carries a material risk to price movements in agricultural commodities, including corn, sugar and soybeans.