Sugar Market Waiting for UNICA Data

The sugar futures market today is awaiting news from UNICA regarding the Brazilian crush. Who or what is UNICA? According to the UNICA, “The Brazilian Sugarcane Industry Association (UNICA) is the largest organization in Brazil representing sugar, ethanol and bioelectricity producers.” There is also a neat video on their site about how sugar is processed and the steps it goes through. We hear about the cane crush all the time and are waiting for the data to come out of Brazil today after the noon hour CST. But why are we waiting? What exactly is the cane crush? The crush is the milling of the sugar cane. This can be done a few different ways but the result is the same, the cane juice is separated from the fiber that remains from the stalks, called bagasse. The cane juice is then further processed into sugar and ethanol. As the crush increases so then, theoretically, should the supply of sugar. The video also said that Brazil provides 20% of the world production of sugar and 40% of the global sales. Big numbers! Today’s data from UNICA should underscore the idea that the market will see further surplus in the near term. The question I saw this morning in commentary from the Hightower group is whether or not the market has priced this surplus in. This question appears to be working itself out on the chart as downside momentum has waned. I agree that technically this market is due for a pop, but would caution that the abundance of supply isn’t going away anytime soon.

If you aren’t already short use a technical rally as a chance to shoot from higher ground for a downside target near 18.00. To speak about this further or to discuss any other futures markets call 800-453-4494 or email me at JNikruto@rjofutures.com.