Wednesday, 25 March 2015 20:30
LONDON: Raw sugar futures prices slumped to a fresh six-year low on Wednesday, weighed on by plentiful supplies as the cane crush in Brazil got underway while the continued weakness of the currency of the world’s top producer added to the downward pressure on prices.
Global stocks of sugar have been climbing during the last few years while the weakness of Brazil’s real currency make exports more attractive to domestic producers.
“The weakness of the Brazilian real has been a big factor in pushing the price down while the prospect of a reasonably good sugar cane harvest in Brazil has also been a factor weighing on the market,” Capital Economics analyst Hamish Smith said.
May raw sugar futures were off 0.03 cents or 0.2 percent at 12.42 cents a lb at 1056 GMT after earlier slumping to a 6-year low of 12.31 cents.
Twenty Brazilian mills had crushed 1.24 million tonnes of cane from the 2015/16 crop by March 15, starting production early, industry association Unica said on Tuesday.
Analyst F.O. Licht on Tuesday forecast a modest rise in the cane crush in the key Centre-South region of Brazil this year but a small drop in sugar production as an increased proportion of the cane is used to produce ethanol.
Smith said, however, that a weak real but may limit the extent of any switch to ethanol by making sugar exports more attractive in local currency terms.
May white sugar futures fell $ 0.30 or 0.1 percent to $ 364.50 per tonne.
Arabica coffee futures were also lower with May down 0.65 cents or 0.5 percent at $ 1.3665 per lb.
The market has also been depressed by the weakness of the real while the outlook could hinge on the outlook for the crop in Brazil this year.
INTL FCStone on Wednesday forecast that Brazil’s 2015 coffee production should be around 44.0 million to 45.5 million bags, down from 48 million to 49 million last year.
May robusta coffee futures was off $ 5 or 0.3 percent at $ 1,813 a tonne.
Cocoa futures were higher with this week’s rally seen as partly a technical correction after a sharp setback in prices during the first half of this month.
May New York cocoa was up $ 29 or 1.0 percent at $ 2,812 a tonne. May London cocoa rose 12 pounds or 0.6 percent to 1,960 pounds a tonne.
Copyright Reuters, 2015
