Sugar futures fell back Friday as sweetener producers took advantage of recent price spikes to book sales.
Raw sugar for October delivery dropped 2.6% to 14.02 cents a pound on the ICE Futures U.S. exchange, nearly erasing two sessions of gains. On Thursday, sugar prices reached their highest levels since Aug. 3 on the back of energy price spikes caused by the effects of Hurricane Harvey in Texas.
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Gasoline prices surged to a two-year high at the pump Thursday after the owner of the largest pipeline in the U.S. reported curtailed shipments as a result of the storm. Energy-price spikes boosted sugar prices as sugarcane producers have a tendency to convert more cane to ethanol when fuel prices are favorable, tightening sugar production.
At the same time, the world's largest sugar producer, Brazil, announced a 4.3% increase in the price of gasoline, which gives ethanol an advantage over gasoline in the local Brazilian market.
"Producers continue to sell to cover export requirements," Nick Penney, senior trader at Sucden Financial, said in a note to client.
"Some, we hear, are attempting to postpone shipments so they can price against March."
In other markets, cocoa for December rose 0.5% to $1,936 a ton, arabica coffee for December was up 0.3% at $1.297 a pound, frozen concentrated orange juice for November was up 1% at $1.351 a pound and December cotton edged up 0.9% at 71.54 cents a pound.
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(END) Dow Jones Newswires
September 01, 2017 11:43 ET (15:43 GMT)