Raw sugar drops 3 pct on weak Brazil currency, higher output

August 18th, 2016


Category: Sugar

Sugar pile 356x200(Reuters) – Raw sugar futures slid 3 percent on Wednesday, breaking a three-session winning streak as the currency in top grower Brazil weakened and the government there revised its production forecast upward.

Cocoa futures extended gains to one-month highs, after briefly paring gains on producer selling, while the New York

September/December spread CCU6-Z6 widened to a contract low ahead of the spot contract’s first notice day on Thursday.

Coffee prices fell to multi-week lows on weakness in Brazil’s real currency.

Raw sugar futures fell sharply, finding support just below the 50-day moving average. October settled down 0.54 cent, or 2.7 percent, at 19.72 cents per lb, after falling 3 percent to 19.65 cents.

Dealers said a weakening in Brazil’s currency helped to fuel the decline.

A weaker real makes international prices more attractive in local currency terms and can boost sales by producers in the world’s top grower of both sugar and coffee.

Dealers said the market was also weighed by sluggish demand and an upwardly revised forecast by Brazil’s crop supply agency Conab, which now pegs the main center-south region’s sugar production at 36.55 million tonnes in 2016-17. This is up from the 34.32 million tonnes forecast in April and 30.88 million tonnes the prior crop year.

October white sugar settled down $13.80, or 2.5 ercent, at $530.70 per tonne. The October/December spread LSUV6-Z6 weakened sharply to a discount as big as $6.50, the widest in 13 months and in sharp contrast to Tuesday’s $2.80 discount.

December London cocoa settled up 13 pounds, or 0.5 percent, at 2,444 pounds per tonne, its highest since mid-July.

Dealers said Ghana-related selling of cocoa helped to temporarily stall the advance but the mood remained upbeat with a large deficit seen in the current 2015-16 season and an uncertain outlook for 2016-17.

December New York cocoa settled up $20, or 0.7 percent, at $3,079 per tonne.

After the market closed, Brazil’s cocoa industry association AIPC said drought has damaged its farms and will force the domestic processing industry to import seven times the volume in 2016 than it did last year.

Arabica coffee futures fell as the real weakened with December settled down 2.65 cent, or 1.9 percent, at $1.381 per lb, the lowest since June 28.

Dealers said there was also ample availability with the harvest in top producer Brazil now in its final stages.

November robusta coffee settled down $25, or 1.4 percent, at $1,785 per tonne, the lowest since July 8.

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