Sugar futures fell sharply Monday after a short-lived buying spree failed to take off, pushing bulls out of the market.
Raw sugar for October ended down 4.2% to settle at 13.56 cents a pound on the ICE Futures U.S. exchange, after topping out at 14.39 cents a pound in earlier trade.
"A lack of follow-through buying meeting overhead selling pressure seemed to weigh on the market, and after easing off back to the 14-cent level, prices then fell rapidly," Michael Liddiard at Agrilion Commodity Advisers noted after the selloff.
This week the sugar market is awaiting word on the latest sugar-production data from Brazil, the world's largest producer of the sweetener. Other factors expected to impact the market this week include a possible increase in import duties in India, which could negatively impact demand.
Meanwhile, the market has begun trading more closely in line with the oil markets as Brazilian state-run oil company Petroleo Brasileiro SA began adjusting domestic gasoline and diesel prices in July on a daily basis instead of monthly.
The policy has so far led to two price reductions in gasoline and diesel, which makes it more difficult for ethanol to compete in the domestic market. Sugarcane producers have a tendency to convert more cane to ethanol instead of sugar when ethanol is competitive against other forms of fuel and when it is more profitable than sugar.
Sucden Financial said in a note Monday that sugar prices above 12.70 cents a pound in the spot market are enough to keep sugar production more favorable than ethanol production.
In other markets, cocoa for September delivery fell 1.8% to end at $1,838 a ton, arabica coffee for September dropped 0.2% to end at $1.286 a pound, frozen concentrated orange juice for September rose 0.8% to close at $1.3485 a pound, and December cotton slumped 1.9% to end at 67.29 cents a pound.
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(END) Dow Jones Newswires
July 10, 2017 16:53 ET (20:53 GMT)