Sugar Prices Drift Higher in Lackluster Trade
18 October 2017 - 5:09PM
Dow Jones News
By Carolyn Cui
Sugar futures rose in thin trade Wednesday in the absence of
fresh news to move prices either way.
Raw sugar futures for March delivery added 0.6% to 14.11 cents a
pound on the ICE Futures U.S. exchange.
Prices remained well anchored and within the tight range they
have been trading in for the past two months, reflecting a market
that has been consumed by bearish sentiment and few new fundamental
developments.
Sugar is the worst-performing commodity so far this year,
weighed down by record supplies from Brazil, the European Union and
other major producers. With prices drifting lower and lower, sugar
users have gradually bought in the futures market and covered the
majority of their future needs. On the other hand, producers have
been waiting on the sidelines for any price increases to hedge
their production.
As of now, sugar mills in central-south Brazil have only hedged
15% of their production for the next crop year, compared with
34%-35% at the same time last year, according to Bruno Lima, head
of sugar and ethanol at INTL FCStone in Brazil.
Commercials as a group held a net short position of 90,000 lots
in the latest weekly report, less than half of their historical
average position, according to Commodity Futures Trading
Commission.
Speculators in the sugar market also showed signs of fatigue,
currently running at a short position of 103,000 lots, which
represented a slight decline from their record short of 130,000
lots, according to the Commission.
Many market observers are closely watching the weather
conditions in Brazil, as any signs of further dryness or the
formation of La Nina next year could help dial back expectations
for Brazil's sugar output and alleviate the concerns over a
glut.
In other markets, cocoa for December added 0.8% to $2,079 a ton,
arabica coffee for December delivery was unchanged at $1.24150 a
pound, frozen concentrated orange juice for November was down 1% at
$1.5115 a pound, and cotton edged 0.2% lower to 67.64 cents a
pound.
Write to Carolyn Cui at carolyn.cui@wsj.com
(END) Dow Jones Newswires
October 18, 2017 11:54 ET (15:54 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.