July 10 (Bloomberg) -- Raw-sugar futures slumped to a three-year low on speculation that Brazil, the world’s largest producer and export, will expand sales to world markets as its currency weakens against the dollar. Arabica coffee also fell.
The Brazilian real weakened to a four-year low of 2.2724 per dollar today, extending an 11 percent slump since the end of March that is creating an incentive for exports sold in the U.S. currency. Sugar futures are down 28 percent from a year earlier. The London-based International Sugar Organization said May 22 that global output will exceed consumption by 10 million metric tons in the 12 months ending Sept. 30.
“As the real has come down and the Brazilian economy has waffled a bit, it makes sense to produce sugar and have it for export,” Judy Ganes-Chase, the president of J Ganes Consulting, said in a telephone interview from Panama. “There will be less demand internally for ethanol as people are going to be driving less.”
Raw sugar for October delivery dropped 0.6 percent to close at 16.25 cents a pound at 2 p.m. on ICE Futures U.S. in New York, after touching 16.19 cents, the lowest for a most-active contract since July 2, 2010. The sweetener is down 17 percent this year, heading for a third straight decline and the longest slump since 1992.
Sugar output for India, the world’s second-biggest producer, is set to exceed demand for the fourth year as the country had the best start to monsoon season in at least 12 years, according to a survey this month of traders, millers and industry executives by Bloomberg.
Arabica-coffee futures for September delivery fell 0.5 percent to settle at $1.2165 a pound on ICE, erasing earlier gains. The lower real also helps coffee exports from Brazil, the largest grower and shipper, Ganes-Chase said.
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