Sugar Futures Tumble
May 23 2017 - 4:02PM
Dow Jones News
By Carolyn Cui
Sugar futures tumbled Tuesday, as traders took profits made over
the past few sessions, with the recent rain expected to stop in
Brazil.
Raw sugar for July delivery dropped 3.9% to settle at 15.87
cents a pound on the ICE Futures U.S. exchange.
Despite the political turmoil in Brazil, prices of sugar gained
in recent days as heavier rainfalls hampered production and
shipment of the sweetener in the world's largest sugar-exporting
country. In addition, a stronger dollar versus the Brazilian real
also helped boost the prices of sugar, which was up as much as 8%
since May 5.
"Today is more like a correction, more than anything else," said
Bruno Lima, head of sugar and ethanol at INTL FCStone in Brazil. He
added that prices failed to break some technical levels a day
earlier, triggering some selling by computer-programmed
traders.
Some producers who were waiting on the sidelines also took
advantage of the recent rally to sell into the market, according to
James Liddiard, an analyst with Agrilion Commodity Advisers.
Sugar prices had been retreating since early February, losing
nearly 30% as of early May, as the industry expected global supply
to outstrip demand in the next season after a two-year deficit.
Strong production in countries such as Brazil and Thailand is
expected to drive up world output by 6.6% to a record 187.7 million
tons, outstripping consumption that is set to expand by 1% next
year--the smallest year-on-year increase in seven years, according
to S&P Global Platts, which saw a surplus of 3.138 million tons
for the next season.
Brazil, as the world's largest sugar exporter, could swing the
market. With 582 million tons of cane, a 2% variation means
Brazil's sugar production could fall in the range between 33.3
million and 36.3 million tons, Platts estimated.
The latest rally was largely driven by the wet weather in
Brazil. "We received a lot of rains in the past few days,"
disrupting crushing at many mills in the country's key center-south
region, Mr. Lima said.
However, the latest forecast showed that rain is expected to
stop, and most of the mills will resume production in the next day
or so, he said. INTL FCStone expects to see no rain at least until
next Tuesday.
In other markets, cocoa for July fell 0.7% to settle at $2,021 a
ton, arabica coffee for July was down 0.3% to close at $1.3025 a
pound, frozen concentrated orange juice for July fell 0.2% to
$1.3580 a pound, and July cotton fell 1.5% to end at 77.22 cents a
pound.
Write to Carolyn Cui at carolyn.cui@wsj.com
(END) Dow Jones Newswires
May 23, 2017 15:47 ET (19:47 GMT)
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