Sugar Falls 9.3% on ‘Computer Trading’ as Cyclone Concern Ebbs
Sugar tumbled 9.3 percent as automatic sales by computer programs exaggerated a slide that started as concerns eased that Cyclone Yasi will reduce output in Australia, traders said.
Crop damage was less than “initially feared” after the cyclone that pounded the coast of Queensland state was downgraded from a Category 5 to a Category 2, according to Commerzbank AG. Prices extended declines as computer orders triggered more sales, said Jeff Bauml, a senior vice president at R.J. O’Brien & Associates, a broker in New York.
“Today’s fall is basically computer trading at its worst,” Bauml said.
Raw sugar for March delivery fell 3.27 cents to settle at 32.04 cents a pound at 2 p.m. on ICE Futures U.S. in New York, the biggest drop since Dec. 30. On that date, the price plunged 10 percent, and the slide was attributed to a wave of computerized “stop losses,” or orders to sell when the price drops to a specified level.
Last month, ICE said it was delaying a move to change how pre-arranged buy and sell orders are executed for contracts including sugar, orange juice and cocoa. The new method, meant to avoid a “cascading stop effect,” was scheduled to take effect on Jan. 25.
A “revised implementation” will be announced after “consultation with market participants,” ICE said on Jan. 18, without providing a time frame.
ICE Confirms Trades
Today, “trades were executed within reasonability limits and outside the threshold for trade cancellation,” ICE said in an e-mail.
Yesterday, the price reached a 30-year high of 36.08 cents on supply concerns in Australia, the world’s third-biggest exporter.
“The market built itself up on this mega cyclone,” said Michael McDougall, a senior vice president at Newedge USA in New York. “For the sugar harvest, the damage was perhaps not as great as people anticipated.”
In London, refined-sugar futures for March delivery fell $30.30, or 3.6 percent, to $814.20 a ton on NYSE Liffe. Yesterday, the price reached $857, the highest since at least January 1989.
Brazil is the leading exporter, followed by Thailand.
To contact the reporters on this story: Debarati Roy in New York at droy5@bloomberg.net; Chris Prentice in New York at Cprentice3@bloomberg.net
To contact the editor responsible for this story: Patrick McKiernan at pmckiernan@bloomberg.net.
Rate this Page