Sugar Heads For Third Session of Losses
March 30 2017 - 12:03PM
Dow Jones News
By Julie Wernau
Raw sugar prices dropped sharply Thursday, on track for a third
straight session of losses as technical traders and underhedged
producers in Brazil drove down prices.
Raw sugar for May delivery lost 2.3% to 16.72 cents a pound on
the ICE Futures U.S. exchange, on track to end at its lowest level
since May 24, 2016.
"Brazil is very much a 'tale of two types of producers' - those
who have the finance to price/hedge as and when they want and those
who have not and cannot until the very last minute," Agrilion
Commodity Advisers said in a note.
Brazil is the world's largest producer of sugar. Last year,
unhedged producers bought futures as the market was rising. But
this year, those who delayed have been buying into a falling market
and have had to cover those bets, the firm said.
Two back-to-back seasons of supply deficits in the sugar market
are ending as the harvest in Brazil gets underway. Sugar bulls had
been betting that the second largest producer of sweetener, India,
would need to import sugar despite government statements to the
contrary, and recent updates out of India have narrowed the
country's deficit, sending the bulls running.
As of last Tuesday, hedge funds and other money managers betting
on higher prices for sugar outweighed bearish bets by the lowest
margin this year, at 69,789 contracts. In January, the margin was
double that figure.
In other markets, cocoa for May was up 0.8% at $2,103 a ton,
arabica coffee for May was up 0.2% at $1.3955 a pound, frozen
concentrated orange juice for May delivery lost 1.9% at $1.6555 a
pound and May cotton was up 0.4% at 76.46 cents a pound.
Write to Julie Wernau at julie.wernau@wsj.com
(END) Dow Jones Newswires
March 30, 2017 11:48 ET (15:48 GMT)
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