Sugar Drops 20% in Two Days
Prices for sugar hit a 30-year high on Thursday at 33.39 cents per pound, however, by the end of the day, prices had dropped about 9.6% closing at 29.66 cents a pound and dropped another 11.6% on Friday to close the week at 26.21 cents per pound.
The drop in prices was sparked by the announcement that India appears to have a sugar surplus of about 3.5 million metric tons which should offset the impact of the drought-stricken harvest in Brazil, the world’s largest producer.
India’s announcement was about 3 times higher than what the market expected. The final total, which determines how much sugar can be exported can be higher. This decision will most likely be made sometime later this month.
China’s expected raise in interest rates also appears to be spooking the market for soft agricultural goods such as sugar, cocoa, coffee and cotton which all fell by at least 3 percent on Friday.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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