By Carolyn Cui

Sugar prices fell Tuesday amid expectations for favorable weather conditions in Brazil, adding to concerns about a global glut of the sweetener.

Raw sugar for October delivery dropped 1.2% to 14.14 cents a pound on the ICE Futures U.S. exchange.

The latest weather forecasts showed that several sugar-growing regions in Brazil would get some rainfall in the coming week, after a long spate of dryness. This would help enhance the crop yields in these areas, according to Michael McDougall, director of commodities agency at Societe Generale.

On the other hand, the EU forecasting agency Mars for the second time in a row raised its estimate of the average sugar beet yields because rainfall in many regions has supported crop growth.

The sugar beet yield was expected to exceed the average by as much as 6.6% and to be 3.7% up year-on-year, helped to a major extent by the robust German figures, the agency said.

In recent weeks, raw sugar prices were pressured by poor demand for refined sugar. The white premium, or the price difference between the white and raw sugar, has dropped lately, reaching levels that aren't sufficient to cover sugar refiners' production costs.

Last Friday, the October white sugar futures expired in London with a 1.3% decline in prices and the smallest physical delivery for the contract since 2009, suggesting poor demand for refined sugar.

Thanks to bumper crops around the world, the sugar market is forecast to experience a significant supply surplus this year.

Societe Generale recently raised its estimate of world sugar production to 179.5 million tons for the marketing year 2017-18, a 5.5% increase from the prior year. As a result, the bank now foresees a global surplus of 5.3 million tons, up from its earlier estimate of 4.5 million tons, due to largely favorable weather in India. Brazil, meanwhile, is expected to produce a record amount of sugar in 2017-18.

In other markets, orange juice for November was up 0.6% to $1.5225 a pound; cocoa for December fell 0.4% to $1,968 a ton; arabica coffee for December fell 3.3% to $1.3575 a pound; and December cotton was down 0.5% to 69.16 cents a pound.

Write to Carolyn Cui at carolyn.cui@wsj.com

(END) Dow Jones Newswires

September 19, 2017 11:43 ET (15:43 GMT)

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