Sugar Futures Fall as Watch Index Funds

Sugar futures fell Friday, ending the week lower as oil prices pushed back from three-year highs.

Raw sugar for March fell 1.1% to end at 15.08 cents a pound on the ICE Futures U.S. exchange, its third session of losses.

When fuel prices fall, that leads some traders to push back on bullish bets for sugar on the expectation that producers will increase sugar production instead of fuel production from cane.

Traders were torn Friday about how Monday's open could look. The market was surprised by a drop in the number of net short contracts in sugar, as reported after Friday's closed by the U.S. Commodity Futures Trading Commission.

The sugar market has been surprised twice in the last few month by unexpected changes in spectator bets. Sucden Financial said before the report that more short-positioned traders were expected to enter the market this week and that it could trigger buying on Monday. But that any surprise could stall sugar's recent rally.

A potential boost to sugar next week--buying from index funds, says Murilo Aguiar, a risk management consultant at INTL FCStone in Brazil.

"We have the official index rebalancing period next week, which could bring to the book an important buying interest influenced by the strong accumulated fall of sugar in 2017," he said in a note.

March cocoa was off 0.5% to end at $1,892 a ton, arabica coffee for March lost 0.9% to end at $1.2845 a pound, frozen concentrated orange juice for March was off 0.6% to settle at $1.38 a pound and March cotton lost 1.6% to end at 78.01 cents a pound.

Write to Julie Wernau at julie.wernau@wsj.com

(END) Dow Jones Newswires

January 05, 2018 17:27 ET (22:27 GMT)