Sugar prices fell Tuesday morning as traders anxiously awaited a joint news conference by the U.S. and Mexico, slated for the early afternoon, for an update on a prolonged sugar trade spat between the two nations.
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Raw sugar futures for July delivery dropped 1.2% to 13.72 cents a pound on the ICE Futures U.S. exchange.
U.S. Commerce Secretary Wilbur Ross and his Mexican counterpart, Economy Minister Ildefonso Guajardo, have been locked in intense talks to try to resolve a longstanding trade dispute over Mexican sugar exports to the U.S. American industry complains that Mexican competitors are illegally dumping their products, aided by Mexican government subsidies.
The Commerce Department issued a statement shortly after 7 a.m. EDT Tuesday announcing the news conference for 1:45 p.m. EDT with Mr. Ross and Mr. Guajardo, but did not elaborate on what they would discuss.
The U.S. extended on Monday by 24 hours the deadline for both sides to work out some technical details and reach a deal. However, by Tuesday morning, the two parties have not yet come to an agreement, according to a person familiar with the matter.
"It's in the interest of both sides to do something," said Michael McDougall, director of commodities agency at Société Générale SA. "I tend to think they will come up with some deal."
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If no deal is reached, the Commerce Department will begin antidumping and countervailing duties that could top a combined 80%, while Mexico will likely retaliate against U.S. high-fructose corn syrup and other sweetener exports.
Sugar prices had fallen 35% since the year's high in early February, as global supply was expected to outstrip demand in the next season after a two-year deficit.
Strong production in countries such as Brazil and Thailand is expected to drive up world output by 6.6% to a record 187.7 million tons, outstripping consumption that is set to expand by 1% next year--the smallest year-over-year increase in seven years, according to S&P Global Platts, which saw a surplus of 3.138 million tons for the next season.
Brazil, as the world's largest sugar exporter, could swing the market. With 582 million tons of sugar cane, a 2% variation means Brazil's sugar production could fall in the range between 33.3 million and 36.3 million tons, Platts estimated.
In other markets, cocoa for July fell 0.5% to $1,980 a ton, arabica coffee for July fell 0.7% to $1.2750 a pound, frozen concentrated orange juice for July fell 1.4% to $1.3385 a pound and July cotton fell 0.3% to 76.06 cents a pound.
--Jacob M. Schlesinger contributed to the article
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(END) Dow Jones Newswires
June 06, 2017 11:32 ET (15:32 GMT)