Raw sugar futures slumped Friday, as concerns over a sugar glut resurfaced and attracted traders to place more bearish bets.
Sugar futures for March delivery fell 2.9%, settling at 13.98 cents a pound, on the ICE Futures U.S. exchange.
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Raw sugar prices rallied earlier this week, largely buoyed by a sudden influx of buyers in the refined sugar market. A sharp rebound in the white premium, or the price difference between the white and raw sugar, had given hopes to some market participants that demand for the sweetener probably was not as poor as expected.
However, white-sugar futures took a downturn on Friday, while the dollar has strengthened against many currencies of commodity producing countries. As of end-Friday, the front-month contract of white sugar futures was only 40 cents per ton over the next-month contract, down from Thursday's high of $2.3 per ton.
That has helped traders focus on the underlying supply and demand of commodities, including sugar.
"To be honest, there aren't many commodities that have extremely positive fundamentals," said Nicholas Gentile, managing partner at NickJen Capital Management & Consulting.
In sugar, analysts are generally expecting a surplus between 2.5 million tons to 4.5 million tons this year, and some trading houses expect the surplus to last until the year of 2020, according to Mr. Gentile.
Some analysts see there is a temporary window for sugar prices to rally from here.
In Brazil, analysts are now expecting the crop year to end a bit earlier because of the dry weather, which could somewhat reduce sugar supply from the largest growing country. In India and Thailand, sugar harvests are expected to be delayed, which might create "a short-term window of very low supply," said Bruno Lima, head of sugar and ethanol at INTL FCStone.
In other markets, orange juice for November was down 1.3% to close at $1.5715 a pound, cocoa for December added 0.1% to $2,085 a ton, arabica coffee for December rose 2.2% to $1.3000 a pound and December cotton was up 0.8% to close at 68.84 cents a pound.
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(END) Dow Jones Newswires
October 06, 2017 15:27 ET (19:27 GMT)