By Julie Wernau

Sugar prices slumped Wednesday as traders looked beyond damage to sugarcane in Australia to oversupply of the sweetener globally. Raw sugar for May was down 2.5% to 17.12 cents a pound on the ICE Futures U.S. exchange, the lowest level since May 24, 2016.

Sucden Financial said in a note that the trend in sugar is lower as traders look toward a new cane crushing season in Brazil, the largest grower, in which sugar production is supposed to be favored over ethanol production. And longer term, India's new crop to be harvested later in the year looks to recover at a time when the European Union is abolishing export quotas for sugar.

Meanwhile, Australia, the third largest exporter of raw sugar, is surveying damage from Tropical Cyclone Debbie. Kenny Miller, a meteorologist at MDA Weather Services, said heavy rain and strong winds from the tropical cyclone were seen across the central tier of Australia's cane belt yesterday and resulted in major flooding that could lead to widespread crop damage. Heavy rains and winds are expected to continue over the next couple of days. "The reports that I've been hearing seem pretty devastating, but I don't think the effects are going to be as catastrophic as they could have been. It will take a few days to assess," Mr. Miller said.

Some traders had anticipated a stronger hit, such as that of Tropical Cyclone Yasi in 2011 when cane broke off from fields, said Mike McDougall at Societe Generale in New York. "There might be some minor downgrades in production, but early on, perhaps not much more than 100,000 tons," he noted. In 2011, cane losses were as high as 500,000 tons.

In other markets, cocoa for May lost 2% to settle at $2,086 a ton, arabica coffee for May was up 0.3% to end at $1.393 a pound, frozen concentrated orange juice for May was down 1% to close at $1.6875 a pound and May cotton lost 1% to end at 76.14 cents a pound.

Write to Julie Wernau at julie.wernau@wsj.com

(END) Dow Jones Newswires

March 29, 2017 15:55 ET (19:55 GMT)

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