Sugar exchange traded products surged Thursday after heavy rains disrupted harvests in Brazil, the world’s biggest exporter, and a drought damaged crops in Thailand.
On Thursday, the iPath Bloomberg Sugar Subindex Total Return ETN (NYSEArca: SGG) rose 5.0% and Teucrium Sugar Fund (NYSEArca: CANE) gained 2.4%. Sugar has sweetened in 2016, with SGG up 14.2% and CANE 14.9% higher year-to-date.
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Meanwhile, sugar futures increased 3.9% to $0.1808 per pound Thursday.
Sugar prices advanced to a two year high Thursday as ongoing rains in Brazil slowed harvests. The heavy rains have already hurt cane crushing in Brazil.
“Rain continues to fall in Sao Paulo and is expected to continue on until early next week. That is causing a slowdown in port loading that began last month,” Michael McDougall, director of commodities for Societe Generale, told Reuters.
[related_stories]Meanwhile, heat and drought due to the worst El Nino weather in six decades have decimated Thailand’s sugar production, which officials now expect to be reduced by 14% compared to last season, the Wall Street Journal reports.
“We were expecting to produce more sugar from the cane than last year, but the drought affected both quality and quantity of sugar cane,” Somsak Jantararoungtong, secretary general at the Thailand’s Office of the Cane and Sugar Board, told The Wall Street Journal.
Additionally, India, the world’s second-largest sugar producer, could turn into a net importer for the 2016 to 2017 season after a wetter monsoon this year was unable to offset the previous two dry years., with production falling to less than 23.5 million metric tons.
According to the U.S. Department of Agriculture, global sugar stocks dipped to their lowest since 2011 at the end of May, Bloomberg reports.
Traders have piled into a bullish position on the soft commodity. Net-longs in sugar futures surged last month to the most since at least 2006.
For more information on the sugar market, visit our sugar category.
iPath Bloomberg Sugar Subindex Total Return ETN