Sugar futures fell to a 43-month low on speculation that increasing production in Brazil, the world’s biggest producer, will add to a global glut.
Output in Brazil’s Center South, the top-producing region, will rise 2.9 percent next season to 35 million metric tons from this year, Safras & Marcado, a research company, said today. World supplies will outpace demand for the fourth straight season in 2014, the International Sugar Organization says.
“The market keeps trying to find reasons to balance, and the fundamental reasons have not materialized,” James Cassidy, the head of the sugar-trading desk at Newedge Group in New York, said today in a telephone interview.
Raw sugar for March delivery fell 1.3 percent to settle at 15.03 cents a pound at 2 p.m. on ICE Futures U.S. in New York. Earlier, the price touched 14.97 cents, the lowest for a most-active contract since June 18, 2010. The commodity has dropped 17 percent in the past 12 months.
Output of cane-based ethanol in Brazil will climb 8.9 percent, according to Safras & Marcado, based in Porto Alegre, Brazil.
Traders are trying to push the price “to a point where we can clear a bunch of sugar and cut off production,” Jack Scoville, vice president of Price Futures Group, Inc. in Chicago, said today in a telephone interview.
Some Brazilian sugar growers may shift to other crops if the slump persists, Cassidy of Newedge said. “We have to be at a price that maximizes ethanol production over sugar and creates more demand.”
Refined-sugar futures for March delivery fell 1 percent to $404.50 a ton (18.35 cents a pound) on NYSE Liffe in London. The price touched $403.40, the lowest since April 22, 2009.
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