Sugar futures fell to a 33-month low as output more than tripled in the second half of April at the main growing area in Brazil, the world’s biggest producer.
Output in the Center South surged to 1.45 million metric tons from 393,200 tons a year earlier, Unica, a Brazilian industry group, said yesterday. This year, raw-sugar prices in New York have dropped 12 percent, the most among eight futures in the Standard & Poor’s GSCI Agriculture Index.
“Oversupply is one of the biggest problems,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview. “We haven’t seen any significant demand increases either.”
Sugar for July delivery fell 0.7 percent to 17.13 cents a pound at 10:47 a.m. on ICE Futures U.S. Earlier, the price touched 17.1 cents, the lowest for a most-active contract since July 19, 2010.
“The expected acceleration of the Brazilian sugar-cane harvest is likely to put some downward pressure on the price structure in the weeks ahead,” F.O. Licht GmbH in Germany said in a report dated yesterday.
Brazil said last month it will give tax deductions and extend low-cost credit to mills in a bid to lift ethanol output. The share of the raw material used to make sugar still increased to 42 percent in the second half of April from 40.1 percent a year earlier, Unica data showed.
“At the moment, it is unclear how exactly this tax benefit will split between mills, distributors and gas stations, and therefore how this decision will impact ethanol prices and production at mills,” Licht said in a separate report yesterday.