Raw-Sugar Prices Drop to 7-Month Low

(Wall Street Journal) – Sugar prices sank more than 3% to a seven-month low on Thursday as the world heads for its fourth consecutive year of extra sweetener.

Production has surpassed consumption since 2010, and the International Sugar Organization expects a supply surplus of about 4 million metric tons in the year ending Sept. 30. Last week, the ISO predicted production would exceed demand next year as well, although by a smaller 1.3 million-ton margin.

Raw sugar for October on ICE Futures U.S. fell 3.1%—the biggest one-day percentage loss in five months—to end at 15.13 cents a pound. It was the lowest closing price since Jan. 30 for the most actively traded raw-sugar contract on ICE.

Still, some analysts and traders are anticipating the end of supply surpluses, pointing to Brazil, where low sugar prices have prompted producers to reduce their output, scale back investments in cane, or shut mills altogether.

Rabobank says global production will likely fall short of demand by 2.5 million metric tons in the year ending Sept. 30, 2015.

As a sign that traders are eyeing tighter supplies next year, the gap between the October 2014 and the March 2015 contracts widened to a record 2.16 cents, which amounts to $2,419 a contract.

In other markets, cocoa futures ended at another six-week low. December cocoa lost 0.5% to end at $3,132 a ton, the lowest settlement for the most actively traded contract since July 22.

Arabica coffee for December ended 0.1% higher at $2.0245 a pound, recovering from a mid-session low of $1.9530 a pound.

Cotton for December ended 0.8% lower at 65.45 cents a pound. Frozen orange-juice concentrate for November fell 0.5% to $1.4860 a pound.