Sugar Ends Higher But Sheds Earlier Gains
July 25 2016 - 3:41PM
Dow Jones News
By Julie Wernau
Raw sugar futures jumped as bullish traders learned that a large
percentage of sugar mills in Brazil are struggling to pay the bills
but failed to end above a closely watched level.
Raw sugar for October rose 1.5% to end at 19.89 cents a pound on
the ICE Futures U.S. exchange, shedding earlier gains that pushed
the contract as high as 20.11 cents a pound in earlier trading.
Reports from a large sugar cane conference in Brazil over the
weekend are casting doubts on the quantity and quality of cane that
will come from the approximately 50% of mills that are struggling
in the center-south growing regions, which produce about half the
sugar in world trade.
"We'll probably find that the agricultural yield will fall for
the producers that are in bad financial shape," said Robin Shaw,
analyst at Marex Spectron in London.
Some mills that are low on cash or credit following a
long-lasting downturn in both sugar and oil prices have not been
re-planting cane at the same rate, he said, and aren't applying the
same amount of herbicides and fertilizers.
Still, Mr. Shaw said he believes sugar's rally is overdone.
Sugar futures are up 32% year-to-date, the second-best performing
major commodity this year behind silver. As of last Tuesday, hedge
funds and other money managers in the sugar market betting on
higher prices outweighed bearish bets by 244,774 contracts,
according to U.S. Commodity Futures Trading Commission data
released Friday.
Last week the sugar market failed to make any significant moves
higher as it digested news that sugar production in Brazil had
improved in the second half of June, up 10.4% at 2.8 million tons.
The market closed nearly unchanged on the week.
Analysts said the contract's failure above the 20 cent level
likely means the bulls are meeting with some resistance that will
prevent the contract from a making another leg higher in the short
term. Trading volumes were light Monday at 76,357 contracts. In the
month of June 110,937 contracts changed hands on the lightest
trading day. So far in July, volumes have been lower than on all
but one trading day.
In other markets, cocoa for September delivery dropped 1.1% to
end at $2,854 a ton, arabica coffee for September fell 0.6% to
close at $1.411 a pound, frozen concentrated orange juice for
September rose 3.7% to end at $1.8735 a pound and December cotton
dropped 0.5% to settle at 72.29 cents a pound.
Write to Julie Wernau at julie.wernau@wsj.com
(END) Dow Jones Newswires
July 25, 2016 15:26 ET (19:26 GMT)
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