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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