Sugar futures posted the longest rally in almost five months as drought threatened crop yields in Brazil, the world’s top producer and shipper, while India postponed a plan to boost exports.
Dry weather in the next 10 to 15 days in Brazil will exacerbate drought conditions, MDA Weather Services in Gaithersburg, Maryland, said on Feb. 3. India’s cabinet deferred a decision on a subsidy expected to help mills export raw sugar. Futures rose to a one-month high yesterday.
A heat wave is scorching crops from cane to coffee in Brazil. The nation had the hottest January on record with the least rain for the period in 20 years, according to Sao Paulo-based Somar Meteorologia. Last month, sugar touched the lowest since 2010, partly on concern that more exports from India, the second-biggest producer, would add to a global glut.
“Brazil’s dryness initiated this move up, and India’s deferral of possible exports added a little fuel to the fire,” Boyd Cruel, a senior market analyst at Vision Financial Markets in Chicago, said in a telephone interview. “Funds are unwinding some of their large net-short position.”
Raw sugar for March delivery climbed 0.7 percent to 16.17 cents a pound today on ICE Futures U.S. in New York. The prices gained for the fifth consecutive session, the longest rally since Sept. 12. The commodity yesterday reached 16.38 cents, the highest for a most-active contract since Jan. 2.
The Standard & Poor’s GSCI Agriculture Index of eight contracts fell 0.2 percent to 356.8228 today after gaining for four days. White, or refined, sugar for delivery in May climbed 0.6 percent to $443 a metric ton, the fifth gain.
In the week ended Jan. 28, money managers and large speculators boosted wagers on a price drop by 4 percent to 58,657 futures and options contracts, the most bearish since July, government data showed.
Last year, sugar tumbled 16 percent. The U.S. Department of Agriculture has forecast a fourth straight global surplus in the season ending in 2014.