Sugar Extends Losses on Strong Brazil Harvest Prospects

By Carolyn Cui Features Dow Jones Newswires

Sugar futures declined Wednesday, extending losses for a crop that has been weighed down by abundant harvest prospects in Brazil.

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Raw sugar for October delivery was down 1.3% to 13.46 cents a pound, on track for its eighth consecutive session of losses on the ICE Futures U.S. exchange.

An S&P Global Platts survey of analysts on Wednesday showed that the market expected a record 50.69 million tons of cane was crushed in the second half of July in central-south Brazil, up 2.6% on the year.

Favorable weather during the period continued to benefit the pace of sugarcane harvesting, with producers losing only 0.18 days due to rains and maintenance, Platts said.

"Sugar is being pressured because the harvest has been going full-speed for two months, which is the longest stretch of dry weather in at least four years," said Michael McDougall, director of commodities agency at Societe Generale S.A.

A recent increase in ethanol prices following rising taxes in Brazil has narrowed the spread between ethanol and international sugar prices over the course of July, but the market has yet to see the effects of the tax changes. Analysts expected that sugar production would be around 3.39 million tons and the mix still favoring sugar over ethanol in a 50.38/49.62 ratio.

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Brazil is the world's largest producer of sweetener, and cane producers can convert cane to either sugar or ethanol. The lower tax rate led traders to believe that there will be more demand for ethanol.

"The market will be looking at the percentage mix of sugar produced to see if millers have reacted to the tightening of the ethanol parity during the period," according to Sucden Financial Research.

In other markets, cocoa for September fell 2.1% to $1,960 a ton, arabica coffee for September was down 1.5% to $1.4055 a pound, frozen concentrated orange juice for September added 1.5% to $1.3545 a pound, and December cotton edged down 1.7% to 69.93 cents a pound.

Write to Carolyn Cui at carolyn.cui@wsj.com

(END) Dow Jones Newswires

August 10, 2017 11:18 ET (15:18 GMT)