Sugar Futures Plunge 9.6%, Most Since 2008, as India, EU Supplies to Rise
Nov. 11 (Bloomberg) -- Uri Landesman, president of Platinum Partners, Lawrence Haverty, portfolio manager at Gamco Investors Inc., and Joel Fishbein of Lazard Capital Markets, talk about the outlook for commodities and earnings at Cisco Systems Inc. and Walt Disney Co. Landesman sees a "commodities explosion" on speculation and dollar selling. They speak with Pimm Fox on Bloomberg Television's "Taking Stock." (Source: Bloomberg)
Raw sugar plunged the most in more than two years on signals that India may have a larger-than- expected surplus and after the European Union announced plans to expand exports. Coffee also declined, while cocoa gained.
The sugar surplus in India, the second-biggest producer, may be 3.5 million metric tons in the year that began Oct. 1, after 4 million tons are set aside for the next season, the government said today. A sugar-factory cooperative has predicted a surplus of 2 million tons. The EU said it will allow an additional 350,000 tons of sugar exports in the 12 months ending in September.
“There has been a great deal of speculation about when and how much India will export,” Michael McDougall, a senior vice president at Newedge USA, said today by e-mail. “The EU news is negative.”
Raw sugar for March delivery slumped 3.15 cents, or 9.6 percent, to settle at 29.66 cents a pound at 2 p.m. on ICE Futures U.S. in New York the biggest drop since March 17, 2008.
Earlier, prices rose to 33.39 cents, the highest level for a most-active contract since January 1981. Raw-sugar has more than doubled since touching a 13-month low on May 7 as adverse weather damaged crops in Russia, China and Brazil, the biggest producer of the sweetener.
Commodity prices also were pressured by a stronger dollar, McDougall said.
The euro slid to a one-month low against the greenback. The U.S. Dollar Index, which values the currency against the euro and five other counterparts, advanced for a fifth straight session on renewed concern that some European countries will struggle to cut budget deficits.
The EU will also lift the duty of 98 euros ($134) a ton on most-favored-nation imports of raw cane sugar from Dec. 1 through next August, according to a statement from the European Commission, the EU’s executive arm.
In London, refined-sugar futures for March delivery lost $22.10, or 2.8 percent, to $768.60 a ton on NYSE Liffe. The commodity earlier rose to $811 a ton, the highest price for a most-active contract since at least January 1989.
“Possible demand resistance, due to high prices, may provoke more significant pressure on futures, a trend which is already observed in the market,” according to a report by FCStone Group Inc.
Arabica-coffee futures for March delivery lost 5.45 cents, or 2.5 percent, to $2.095 a pound in New York. In London, robusta-coffee futures for January delivery fell for the second day, declining $53, or 2.7 percent, to $1,931 a ton on NYSE Liffe.
Cocoa futures for March delivery rose $11, or 0.4 percent, to $2,866 a ton in New York. The chocolate ingredient has gained 1.2 percent this month. In London, cocoa futures for Decmber delivery fell 1 pound, or 0.1 percent, to 1,846 pounds ($2,975) a ton.
To contact the reporters on this story: Stephen Morris in London at smorris39@bloomberg.net; Debarati Roy in New York at droy5@bloomberg.net.
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net.
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