The FINANCIAL — Sugar prices fell on September 15 as a dry weather forecast for Brazil had traders expecting more sweetener on the horizon, according to Nasdaq.
The center-south region of Brazil, which produces 90% of sugarcane in the world’s largest sugar-producing country, has had heavy unseasonal rains so far this month, said Agrilion Commodity Advisers, with 100 millimeters (4 inches) in the first half of September compared with 16 millimeters a year earlier and 17 on average for that period.
While traders are expecting that several days of harvesting will be lost because of the rain, there is no rain in the forecast until the middle of next week, the Hightower Report said, which could increase harvest. At the same time, some traders believe the rains this month will extend the tail end of the cane crushing season.
Raw sugar prices for October delivery fell 0.9% to end at 11.40 cents a pound on the ICE Futures U.S. exchange.
The contract had fallen as low as 11.23 cents a pound but pared those losses before Tuesday’s close. The raw sugar contract has managed to push higher since Aug. 24 when it dropped to 10.39 cents a pound, its lowest in seven years, on the back of a battered Brazilian real and concerns about a weakening economy in China.
“The market is still moving erratically but before this sustained rally began four weeks ago the pattern seemed to be two steps down and one step up–now it seems to be the other way round,” commodities brokerage Marex Spectron said in a note.
While the world is looking at China as the reason for sliding commodity prices, for the sugar market, China’s imports have been growing and world consumption is expected to outstrip demand for the first time next year after five seasons of surplus production.
“China may prove to be the savior to prevent prices from slipping lower and lower,” Judith Ganes-Chase at J. Ganes Consulting LLC said in a recent note.
Analysts say the contract is beginning to move more in line with its fundamental supply-and-demand outlook.
In other markets, arabica coffee for December fell 1.3% to end at $1.187 a pound; December cocoa dropped 1.5% to close at $3,238 a ton; cotton for December delivery ended flat, at 62.52 cents a pound; and frozen concentrated orange juice futures for November closed down 1%, at $1.223 a pound.
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