Raw Sugar Tumbles to Lowest Since 2010 on Ample Global Supplies

(Bloomberg) – Raw-sugar futures fell to the lowest since 2010 as a bigger cane harvest in Brazil, the world’s top producer and exporter, adds to a global glut.

Mills in Brazil’s Center South, the main growing region, may crush 590 million metric tons of cane in the season ending in March, up from a previous estimate of 587 million, Unica, a Sao Paulo-based industry group, said today. The global sugar surplus will be 8.3 percent higher than projected in September as output expands in the South American nation and in Thailand, the second-largest shipper, according to researcher Green Pool Commodity Specialists Pty.

Sugar is headed for the third straight annual drop, the longest slump since 1992. Global stockpiles will climb 0.5 percent to a record 43.379 million tons in the season ending in 2014, the U.S. Department of Agriculture estimates. Krispy Kreme Doughnuts Inc. is locking in lower prices by making forward purchases, Chief Executive Officer James H. Morgan said in September.

“We have weak supply fundamentals, and the demand side is still anemic,” James Cassidy, the head of sugar trading at Newedge USA LLC in New York said in a telephone interview.“World inventories are rising.”

Raw sugar for March delivery slid 1.9 percent to settle at 15.96 cents a pound at 2 p.m. on ICE Futures U.S. in New York, after reaching 15.91 cents, the lowest for a most-active contract since July 1, 2010. This year, the price sank 18 percent.

In the season started Oct. 1 for most countries, supplies will be 5.046 million tons higher than demand, up from a September forecast of 4.66 million tons, according to Brisbane, Australia-based Green Pool.  In the week ended Dec. 10, U.S. money managers cut-net bullish bets 66 percent from a week earlier to the lowest in almost three months, government data show.

‘Downward Trend’

“The bulls seem to be letting the rock roll down the hill,” Nick Penney, a senior trader at Sucden Financial Ltd. in London, said in a report. “Until we see either strong physical offtake emerge or an improvement in the macro picture affecting commodities, we feel it is inadvisable to buck what has been a strong downward trend.”

Mills in India will be given financial assistance to boost raw-sugar output in a bid to increase exports and ease a domestic glut, Agriculture Minister Sharad Pawar said this month.

“Increased offers from India and Thailand combined with good supplies available from Brazil keep overall trends down,”Jack Scoville, a vice president for Price Futures Group in Chicago, said in a report.