Sugar prices fell Monday amid expectations for greater rain in Brazil in the coming days, adding to concerns about a global glut of the sweetener.
Raw sugar for October delivery dropped 1.7% to settle at 13.74 cents a pound on the ICE Futures U.S. exchange.
According to the forecasts, the precipitation will begin as isolated to scattered showers during the early to middle part of this week and then increase. Daily rainfall through midday Friday will vary from a trace to 8 millimeters with a poor distribution favoring Parana, Sao Paulo and a few locations in both Minas Gerais and Rio de Janeiro.
The expected rainfall in Brazil has added to the bearish sentiment in the sugar market. In recent days, sugar traders were weighing a massive jump in European production versus the potential impact of dry weather on the Brazilian crop next year.
As of last week, most of the forecasts suggested that Brazil is expected to produce around 34 million tons of raw sugar in the next season, a drop of about 7.5% from this year, according to Michael McDougall, director of commodities agency at Societe Generale.
Broadly, the Baltic dry freight rates have recently risen to the highest levels since November 2014, indicating a pickup in global demand for commodities and an improving world economy. Global trade is expected to grow 3.6% this year, after an anemic increase of 1.6% in 2016, according to Mr. McDougall. Crude oil demand showed a 2.4% increase in the second quarter to 2.2 million barrels, he said, compared with the 1.6 million barrels that were expected. Crude oil prices were recently up 1.3% to $51.30 per barrel on Monday.
"A rise in crude demand and potentially prices has much more of a direct effect on sugar prices, but seeing encouraging signs on improved economy growth is important," Mr. McDougall wrote in a note to clients Friday.
He said that the firm still holds "a positive bias" on sugar.
In other markets, orange juice for November was down 0.9% to close at $1.4555 a pound; cocoa for December fell 0.6% to settle at $1,972 a ton; arabica coffee for December fell 2.2% to close at $1.3155 a pound; and December cotton was up 1.5% to end at 69.46 cents a pound.
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(END) Dow Jones Newswires
September 25, 2017 15:17 ET (19:17 GMT)