Brazilian truckers strike’s minimal impact curbs sugar prices’ gains
- Sugar prices reversed previous gains to trade at around $15.95.
- Division among Brazilian truckers has resulted in protests with minimal impact on road haulage.
- The US dollar is strengthening due to bullish economic data, the stimulus package, and high Treasury yields.
Sugar prices reversed the previous gains as the market reacted to the strengthening US dollar. Those looking to invest in commodities are also responding to the low-intensity protests in Brazil. As at 08.43 GMT, the soft commodity was trading at $15.95.
Brazilian truckers’ strike
Last week, sugar prices rallied as the market anticipated for supply tightness this week. The sentiment was founded on the truckers’ strike set to start on 1st February in Brazil. The ANTB and CNTRC unions strived to lead nationwide protests of a magnitude similar to those of May 2018.
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The 2018 incident, which paralyzed road transportation for 10 days, deprived citizens of essentials such as food and medicine. With the country being a key producer of the raw sugar consumed globally, a repeat of the past event would disrupt the commodity’s supply.
However, the strike has had minimal impact on road haulage in the country. The truckers seem to be divided on the best strategy of handling their concerns over rising diesel prices. While some unions are pro-protests, others are prioritizing talks with the national government.
The truckers had disrupted traffic flow near Barueri. However, vehicles flowed freely in the major federal roads. Evidently, the demonstrations have not been intense enough to tighten sugar supply.
The strengthening US dollar has also had an impact on sugar prices. Over the course of this week, the dollar index has risen by about 0.85%. On Thursday, the USDEUR currency pair was up by 0.26% while USDGBP rose by 0.42%.
The high US Treasury yields have offered support to the greenback. On Wednesday, the 10-year yields surpassed the 1.1% level.
Besides, the positive sentiment triggered by the Biden’s stimulus package has pushed the dollar higher. On Tuesday, Democrats cast the first round of votes despite the Republicans’ opposing stand.
At the same time, the ISM’s data on non-manufacturing PMI came in bullish for the greenback. At 58.7, the surpassed the previous month’s 57.7 and the forecasted 56.8.
Notably, sugar prices have a negative correlation with the US dollar. This is because a strong dollar makes it more expensive for the buyers of the soft commodity.