Sugar Prices Fall on Rain Forecast for Brazil
September 25 2017 - 3:32PM
Dow Jones News
By Carolyn Cui
Sugar prices fell Monday amid expectations for greater rain in
Brazil in the coming days, adding to concerns about a global glut
of the sweetener.
Raw sugar for October delivery dropped 1.7% to settle at 13.74
cents a pound on the ICE Futures U.S. exchange.
According to the forecasts, the precipitation will begin as
isolated to scattered showers during the early to middle part of
this week and then increase. Daily rainfall through midday Friday
will vary from a trace to 8 millimeters with a poor distribution
favoring Parana, Sao Paulo and a few locations in both Minas Gerais
and Rio de Janeiro.
The expected rainfall in Brazil has added to the bearish
sentiment in the sugar market. In recent days, sugar traders were
weighing a massive jump in European production versus the potential
impact of dry weather on the Brazilian crop next year.
As of last week, most of the forecasts suggested that Brazil is
expected to produce around 34 million tons of raw sugar in the next
season, a drop of about 7.5% from this year, according to Michael
McDougall, director of commodities agency at Societe Generale.
Broadly, the Baltic dry freight rates have recently risen to the
highest levels since November 2014, indicating a pickup in global
demand for commodities and an improving world economy. Global trade
is expected to grow 3.6% this year, after an anemic increase of
1.6% in 2016, according to Mr. McDougall. Crude oil demand showed a
2.4% increase in the second quarter to 2.2 million barrels, he
said, compared with the 1.6 million barrels that were expected.
Crude oil prices were recently up 1.3% to $51.30 per barrel on
Monday.
"A rise in crude demand and potentially prices has much more of
a direct effect on sugar prices, but seeing encouraging signs on
improved economy growth is important," Mr. McDougall wrote in a
note to clients Friday.
He said that the firm still holds "a positive bias" on
sugar.
In other markets, orange juice for November was down 0.9% to
close at $1.4555 a pound; cocoa for December fell 0.6% to settle at
$1,972 a ton; arabica coffee for December fell 2.2% to close at
$1.3155 a pound; and December cotton was up 1.5% to end at 69.46
cents a pound.
Write to Carolyn Cui at carolyn.cui@wsj.com
(END) Dow Jones Newswires
September 25, 2017 15:17 ET (19:17 GMT)
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