Raw Sugar Slips on Expiration; Cotton Falls to Five-Year Low

(Wall Street Journal) – Raw-sugar futures fell Tuesday as the front-month contract expired, while cotton prices fell to the lowest level in almost five years.

Raw sugar for October fell 1.2%, to end at 15.48 cents a pound on the contract’s last trading day. The gap between the October and March contracts narrowed to 0.97 cent, the smallest since June 20, and was down 46% from the contracts’ record of 1.79 cents reached on July 11.

The narrower price gap was a sign of increased demand, after October sugar fell to a more than five-year low earlier this month, said James Liddiard, senior vice president at Agrilion Commodity Advisers LLC, a consulting firm in New York.

“When the spread got into a big discount, there were end users, refiners, who said this was a good chance to pick up some cheap sugar,” he said. “It does look like there were a good amount of deals done.”

There will be 10,406 lots—equal to about 529,000 metric tons of sugar—delivered against the October contract, said Jeff Dobrydney, vice president of JSG Commodities, a brokerage in South Norwalk, Conn.

A large amount of unwanted sugar from Thailand helped push prices lower earlier this month, but demand likely picked up since the sugar to be delivered will include some from Central America and Brazil in addition to Thailand, Mr. Dobrydney said.

“It tells us that there were some deals done beforehand,” he said.

Still, raw-sugar prices ended the third quarter down 8.7%, after the International Sugar Organization issued a forecast for a fifth consecutive production surplus next season, which begins Wednesday.

Cotton futures ended at a nearly five-year low, with the December contract falling 0.2%, to 61.37 cents a pound. Prices tumbled 17% in the quarter after the U.S. Department of Agriculture said U.S. growers would increase production by 28% this year and top cotton importer China revealed it would significantly decrease its purchases of the fiber next year.

Arabica-coffee futures ended at a three-week high on continued concerns about the size of Brazil’s crop. Prices gained 10% in the three months ended Tuesday as early rainfall in Brazil sparked premature flowering on some trees. Those rains were followed by dry weather, which could force coffee trees to abort the flowers and not produce cherries.

Arabica coffee for December rose 1.1%, to $1.9335 a pound, the highest closing price since Sept. 8.

Cocoa for December ended down 0.3%, at $3,300 a ton. Still, price are up 5.5% this quarter after the Ebola virus outbreak in West Africa raised concerns that the disease could spread to top cocoa grower Ivory Coast.

Orange juice for November ended 0.6% lower at $1.4475 a pound. The futures fell 1.3% in the quarter.