Sugar Futures Fall to Lowest Since June 2010

(Wall Street Journal) – Raw-sugar futures fell to the lowest level in more than 3½ years on Monday, as a global oversupply of the sweetener and weaker emerging-market currencies encouraged a new round of selling.

Raw sugar for delivery in March on the ICE Futures U.S. exchange fell as low as 14.94 cents a pound, the lowest level since June 8, 2010 for the most actively traded contract.

Strong harvests in recent months from big producers like Brazil, India and Thailand have added to expectations of widespread supplies for the year. World sugar supplies are expected to outpace demand by 4.7 million metric tons in the 2013-14 season, which ends in September, according to the International Sugar Organization.

Money managers have been increasing their bets that raw-sugar prices would continue to fall. In the week ended Jan. 21, those bets outweighed wagers that prices would rise by the largest margin since July, according to the latest data from the Commodity Futures Trading Commission.

Weakening currencies in Brazil and other large sugar producers also are expected to encourage exports, which could add to already robust supplies, said Michael McDougall, a senior vice president at brokerage Newedge.

“It’s concern over emerging-market currencies,” Mr. McDougall said of Monday’s move lower.

When currencies in sugar-exporting countries weaken against the U.S. dollar, producers there often choose to export their crop because they would receive more of their local currency back for product sold abroad in dollars.