Sugar futures tumbled Tuesday, as the latest report by the Brazilian cane industry group attracted more bears into the sugar pit.
Raw sugar for October delivery dropped 3.9% to settle at 13.21 cents a pound on the ICE Futures U.S. exchange.
Sugar fell as Brazil's cane industry group Unica said Tuesday that mills in Brazil's center-south region crushed more cane and produced more sugar than expected in the first half of September.
Mills in the world's largest sugar-producing region crushed 45.4 million metric tons of cane in the first half of September, a rise of 20% from the same period a year earlier. Sugar production rose to 3.1 million tons, up 29.2%, and ethanol output rose 30.3% to 2.1 billion liters. The production mix for the first half of this month was 48% sugar to 52% ethanol.
The results were slightly more bearish than what the analysts expected, according to a survey by S&P Platts Kingsman.
After sugar hit above 15 cents a pound last week in the most active contract, many producers sold into the rally and locked in their output. At the same time, money managers also reduced 26% of their net short positions in the week ended last Tuesday, as prices were drifting higher.
But sentiment turned bearish again this week, pressured by poor fundamental news including a meager white premium, large supplies from Europe and weaker import demand from China. The latest Unica report didn't help, either.
The Tuesday report showed that although ethanol continued to pay better than sugar during the first half of September, the proportion of sugarcane directed to sugar production increased from the prior two weeks, thanks to the recovery in the ATR and the dry weather, according to S&P Platts Kingsman.
Michael K. Kerensky at R. J. O'Brien & Associates, LLC, a brokerage, said that there was little buying action from sugar users who usually would take advantage of price drops like Tuesday's to hedge some of their future uses. The lack of commercial buying helped aid the price slump, and it also suggested that sugar users thought there was more downside to the move, Mr. Kerensky said.
In other markets, cotton futures for December fell 1% to settle at 68.75 cents a pound, orange juice for November was up 1.6% to close at $1.4780 a pound, cocoa for December skidded 0.1% to end at $1,971 a ton, and arabica coffee for December rose 0.5% to $1.3225 a pound.
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(END) Dow Jones Newswires
September 26, 2017 15:14 ET (19:14 GMT)