Sugar futures declined Tuesday, as the market was weighed down by concerns over weak demand and poor results at major trade houses.
Raw sugar for March delivery fell 1.1% to settle at 14.03 cents a pound, on the ICE Futures U.S. exchange.
Sugar prices came under pressure since last week, when about 20,000 contracts of raw sugar were delivered against the expired October contract. COFCO International, a Chinese agribusiness company, was responsible for 70% of the delivery. That represented COFCO's second large delivery in recent months.
The fact that an Asia-based company, which sits in a region where the world's largest sugar consumers are, has been repeatedly sending sugar to the commodity exchange has raised questions among some traders about how strong the demand is in Asia, said Nick Gentile, a managing partner at Nickjen Capital.
After sugar prices stayed low for a prolonged period of time, many companies in the industry are expected to report poor earnings or even losses in their sugar divisions.
Mr. Gentile estimated that the margins in sugar are around 2% to 3%, so "the room for error is marginal."
Singapore-based Wilmar International, one of the world's largest sugar traders, reported a loss of $107 million in its sugar division for the second quarter, the company's first loss since the group ventured into sugar.
"All in all, the market continues to play out the nearby 'bearish status quo' mixed up with the huge short already transparently in the (market) and creating the range bound short-term stalemate price action," wrote Tom Kujawa, co-head of softs departments at Sucden Financial Research.
In other markets, cocoa prices for December added 1% to close at $2,064 per ton; orange juice for November was up 0.3% to end at $1.5275 a pound; arabica coffee for December rose 0.3% to $1.2415 a pound; and December cotton was up 0.4% to close at 67.77 cents a pound.
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(END) Dow Jones Newswires
October 17, 2017 15:11 ET (19:11 GMT)