Raw Sugar Futures Fall

(Wall Street Journal) – Sugar prices slipped to the lowest level in more than five years Tuesday on continued expectations that production of the sweetener would outpace demand for a fifth consecutive year.

Raw sugar for October, the most actively traded contract, fell 0.9% to 13.55 cents a pound, the lowest settlement since April 22, 2009, on the ICE Futures U.S. exchange. It was the 10th consecutive session of losses for the market, the longest since an 11-session decline that ended on Dec. 5, 2013.

Sugar prices have been falling for months, dropping 27% from the most recent peak of 18.75 cents a pound in June, as bumper crops from major producers and anti-sugar-consumption campaigns have led to four years of more sugar than the world can handle. At an industry conference last week, sugar trader and processor Bunge Ltd. forecast global production would exceed demand by 3.5 million metric tons in the year beginning Oct. 1, almost triple the surplus the International Sugar Organization has forecast for the coming crop year.

While the October contract has fallen, sugar deliverable next year is much higher. The price gap between the March and October futures contracts widened to a record 2.62 cents a pound, which amounts to a difference of $29,344 per contract.

The March contract “at least disguises how low the market has fallen,” said Agrilion Commodity Advisers LLC, a consulting firm in New York in a note. “The focus is now on whether it will break through 16” cents a pound.

The March contract settled 0.6% lower at 16.17 cents a pound.

Frozen orange-juice concentrate futures for November ended 1.5% lower at $1.4260 a pound, the lowest for the most actively traded contract since Aug. 8. The move followed the publication of a report on Monday that showed U.S. consumers purchased less orange juice in August than a year ago.

Consumers bought 35.98 million gallons of orange juice in the four weeks ended Aug. 30, down 8.3% from last year, according to Nielsen data published by the Florida Department of Citrus. Prices for the beverage hit a record in August, rising 4.5% from a year ago to average $6.46 a gallon, as Florida growers reaped their smallest crop in 29 years. But lower sales translated to a 4.2% drop to $232.54 million, according to the report.

Arabica coffee for December rose 1.7% to end at $1.8525 a pound, snapping a two-day losing streak after Brazil’s government crop agency Conab said growers would reap 45.1 million bags of coffee. While that estimate was up 1.1% from its May forecast, Conab revised its forecast for arabica to 32.1 million bags, down slightly from its May estimate of 32.2 million bags. Each bag weighs 60 kilograms.

Cocoa for December ended 0.4% higher at $3,070 a ton, while December cotton fell 0.4% to 65.55 cents a pound.