Sugar exchange traded products rallied Thursday on optimistic news from Europe, which helped weaken the dollar and propped up commodities. However, analysts remain bearish on sugar over the long-term.
The iPath Dow Jones-UBS Sugar Subindex Total ReturnSM ETN (NYSEArca: SGG) was up 7.13% at last check, iPath Pure Beta Sugar ETN (NYSEArca: SGAR) was up 5.85% and Teucrium Sugar Fund (NYSEArca: CANE) rose 7.06%.
Raw sugar futures for March delivery jumped more than 8%, touching a week-high of $26.44 on Thursday, as the U.S. dollar weakened, reports Andrea Tse for TheStreet.
“Europe pushed the dollar lower and commodities rallied based on that,” Vision Financial Markets analyst Boyd Cruel, remarked. “The market was technically oversold,” he added.
Additionally, rumors circulated of the possibility that China would be stepping into the market.
However, Cruel and PFGBest commodity market analyst Robin Rosenberg remain bearish on sugar, according to TheStreet report.
“My take on today’s rally is that it is technical in nature,” Rosenberg said. He points out that sugar is following a “double-top” chart pattern – a peak of an upward trend, and a precursor that could single markets are losing interest.
Credit Suisse reduced its 3-month and 12-month raw sugar forecasts to 26 cents a pound in 3- and 12-months, down from 32 cents and 33 cents respectively, reports Isis Almeida for Reuters.
“While Brazilian sugar output is expected to disappoint this season, large crops in India, Thailand, Europe and Russia should keep the market sufficiently supplied,” Credit Suisse analysts led by Tobias Merath commented in a report. “The global sugar market is likely to end the 2011-2012 marketing year with a significant surplus, limiting price upside.”
iPath Dow Jones-UBS Sugar Subindex Total ReturnSM ETN
For more information on sugar, visit our sugar category.
Max Chen contributed to this article.