Sugar futures are returning to levels not seen since the beginning of April, helped by concerns over the size of the sugar crop in Brazil, the biggest global producer. 

ICAP do Brasil, the country’s largest sugar-producing firm, said on Friday that harvests would fail to reach a previous estimate, due to heavy rains. The harvest is now forecast to total 550 million metric tonnes, down from the March estimate of 568.5 million tonnes, and the reduced crop estimate matches the report from Unica, Brazil’s sugar industry association, which said that output was down 17% in May compared to a year earlier. In addition, a dearth of sugar at Brazil’s ports has caused a backlog of shipments to build up, raising supply concerns further. Certainly, from looking at the chart, it appears sugar prices may be in for a good run.

The price has broken above the 200-day moving average, and the 20-day moving average has turned positive, after a long downward trend. These signals should help support prices for the time being. However, in the longer term the supply situation looks fairly promising, with supplies expected to exceed demand by 10.3 million metric tonnes for the 12 months starting in October. Production will reach 14.2 million tonnes, reaching a record 182.2 million tonnes, allowing for restocking of inventories. Ample supply should therefore help to limit price gains, and indeed bring prices down over the coming year, which should please all those with a sweet tooth.