Sugar futures slumped Tuesday after traders were surprised by a report out of Brazil that showed larger than expected sugar production.
Raw sugar for July lost 0.5% to 13.95 cents a pound on the ICE Futures U.S. exchange.
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The total volume of sugarcane crushed in the second half of May reached 31.587 million tons, down 2.8% from last year but 2 million tons larger than analysts predicted in a survey by S&P Global Platts.
Brazil is the world's largest producer of sweetener. The report, by Brazilian industry group Unica, also indicated more cane had been converted to sugar than analysts expected, at 1.754 million tons, a 4% increase over the same period last year and 160,000 tons more than analysts anticipated.
The increased sugar production was a result of producers converting a larger amount of cane to sugar production than analysts anticipated, with 47.95% of cane converted to sugar rather than ethanol, a 6% increase over last year. The increase came even with 8 fewer mills operating than at the same time last year.
"For the second time running, Unica seems to have surprised many in the market," said James Liddiard at Agrilion Commodity Advisers.
The firm noted that on an accumulated basis, cane and sugar production are still 20.8% and 18.75% below last year when the season saw a rapid start but said the initial reaction to the data was bearish.
In other markets, cocoa for September was down 0.1% at $2,085 a ton, July arabica coffee lost 0.7% at $1.267 a pound, frozen concentrated orange juice for July fell 1.1% to $1.3965 a pound and July cotton lost 1.1% to 74.32 cents a pound.
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(END) Dow Jones Newswires
June 13, 2017 11:40 ET (15:40 GMT)