Sugar Prices Fall After Brazilian Production Surpasses Expectations
September 26 2017 - 3:29PM
Dow Jones News
By Carolyn Cui
Sugar futures tumbled Tuesday, as the latest report by the
Brazilian cane industry group attracted more bears into the sugar
pit.
Raw sugar for October delivery dropped 3.9% to settle at 13.21
cents a pound on the ICE Futures U.S. exchange.
Sugar fell as Brazil's cane industry group Unica said Tuesday
that mills in Brazil's center-south region crushed more cane and
produced more sugar than expected in the first half of
September.
Mills in the world's largest sugar-producing region crushed 45.4
million metric tons of cane in the first half of September, a rise
of 20% from the same period a year earlier. Sugar production rose
to 3.1 million tons, up 29.2%, and ethanol output rose 30.3% to 2.1
billion liters. The production mix for the first half of this month
was 48% sugar to 52% ethanol.
The results were slightly more bearish than what the analysts
expected, according to a survey by S&P Platts Kingsman.
After sugar hit above 15 cents a pound last week in the most
active contract, many producers sold into the rally and locked in
their output. At the same time, money managers also reduced 26% of
their net short positions in the week ended last Tuesday, as prices
were drifting higher.
But sentiment turned bearish again this week, pressured by poor
fundamental news including a meager white premium, large supplies
from Europe and weaker import demand from China. The latest Unica
report didn't help, either.
The Tuesday report showed that although ethanol continued to pay
better than sugar during the first half of September, the
proportion of sugarcane directed to sugar production increased from
the prior two weeks, thanks to the recovery in the ATR and the dry
weather, according to S&P Platts Kingsman.
Michael K. Kerensky at R. J. O'Brien & Associates, LLC, a
brokerage, said that there was little buying action from sugar
users who usually would take advantage of price drops like
Tuesday's to hedge some of their future uses. The lack of
commercial buying helped aid the price slump, and it also suggested
that sugar users thought there was more downside to the move, Mr.
Kerensky said.
In other markets, cotton futures for December fell 1% to settle
at 68.75 cents a pound, orange juice for November was up 1.6% to
close at $1.4780 a pound, cocoa for December skidded 0.1% to end at
$1,971 a ton, and arabica coffee for December rose 0.5% to $1.3225
a pound.
Write to Carolyn Cui at carolyn.cui@wsj.com
(END) Dow Jones Newswires
September 26, 2017 15:14 ET (19:14 GMT)
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