Sugar futures fell Monday, extending their losses into the fifth session, as producers took advantage of the recent bump in sugar prices to lock in future revenues.
Raw sugar for October was down 1.9% to settle at 13.87 cents a pound on the ICE Futures U.S. exchange.
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Prices briefly overtook the 15-cent level early last week, the highest in two months, as traders anticipated Brazil's new fuel taxes would lead cane producers there to convert a smaller percentage of cane to sugar.
Brazil is the world's largest producer of sweetener, and cane producers can convert cane to either sugar or ethanol. The lower tax rate led traders to believe that there will be more demand for ethanol.
Noncommercials, who as a group were betting on lower sugar prices, rushed to cover their short positions. Speculators liquidated 21,846 lots in the week ended Aug. 1, the largest weekly move in 16 months, according to the Commodity Futures Trading Commission.
"As the market was going up, we're seeing a lot of producers selling heavily. Down here in Brazil, producers still have a lot to price," said Bruno Lima, head of sugar and ethanol at INTL FCStone in Brazil.
Favorable weather conditions in Brazil led producers to think that sugar prices could face further downward pressure, he added. About 55% to 60% of their exposures still need to be priced against the October contract, Mr. Lima estimated.
In other markets, cocoa for September gained 1.8% to close at $2,029 a ton, arabica coffee for September was up 1.4% to settle at $1.4205 a pound, frozen concentrated orange juice for September lost 0.9% to settle at $1.3410 a pound, and December cotton edged down 0.1% to 70.55 cents a pound.
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(END) Dow Jones Newswires
August 07, 2017 15:10 ET (19:10 GMT)