Sugar futures declined Wednesday, extending losses for a crop that has been weighed down by abundant harvest prospects in Brazil.
Raw sugar for October delivery declined 2.9% to settle at 13.24 cents a pound, extending its losses to the eighth consecutive session on the ICE Futures U.S. exchange.
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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 day because of 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 SA.
Brazilian mills don't have the storage capacity to hold the crop, and they need to sell the sugar to pay for cane crushing, he said.
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.
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.
In other markets, a monthly estimate of world supply and demand for cotton took traders by surprise. The U.S. Department of Agriculture said its first survey of U.S. crop production indicated a 20.5 million-bale crop, the largest in 11 years. The massive production far outweighs the expectations of analysts surveyed by The Wall Street Journal who had expected 18.83 million bales, a slight drop from last month's 19-million-bale estimate.
An estimate of sharply higher production pushed down cotton futures, with the December contract down 4.2% to settle at 68.11 cents a pound.
Cocoa for September fell 1.8% to settle at $1,967 a ton, arabica coffee for September was down 2.9% to close at $1.3850 a pound, frozen concentrated orange juice for September added 1.6% to close at $1.3555 a pound.
--Julie Wernau contributed to the article.
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(END) Dow Jones Newswires
August 10, 2017 15:07 ET (19:07 GMT)