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videos | IST

Soft commodity prices to see rebound; sugar, cotton already at 21-week highs

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One of the factors responsible for higher sugar prices could be lower production in the global market. India had exported a lot of sugar but at this point, exports are slowing. Secondly, in Brazil, there is cold frost, which seems to be damaging the standing crop.

Soft commodities are in focus because they are showing strength with sugar and cotton already at 21-week highs. Global sugar prices are trading above $18 dollars a pound. In the month of May, the prices were $18.9 per pound, which was a four-year high.
One of the factors responsible for higher sugar prices could be lower production in the global market. India had exported a lot of sugar but at this point, exports are slowing. Secondly, in Brazil, there is cold frost, which seems to be damaging the standing crop.
With regards to cotton, prices are around $91 per pound on July 27. In India, prices are at an all-time high amid expectations of lower supply and increased demand from the textile industry as countries continue re-opening efforts.
Moreover, stocks at Cotton Corporation of India (CCI) are also low. Even as the prices are rising, the demand from mills is quite strong and the new crop is only expected after two to three months.
Globally too, cotton stocks are projected at a three-year low. The global production is expected to increase by 5 percent this year but this would still be lower than the pre-pandemic numbers in 2019.
The market expects strong demand to continue from China because the production in the country declined due to high labour costs.
Therefore, soft commodities may see a rebound, and not just for sugar and cotton but also rubber, coffee, etc. that are trading at multi-year highs.
For more, watch the accompanying video