Sugar Jumps on Import Data; Cotton Drags on Texas Weather

(Nasdaq) – Sugar prices marched higher Thursday on news of a surge in Chinese imports of the sweetener.

Raw sugar for March delivery rose 3% to end at 14.60 cents a pound on the ICE Futures U.S. exchange, the highest close since Feb. 19.

China imported 656,000 tons of sugar in September, an 80% increase year-to-year and the highest volume since 2013, according to Commerzbank. Year-to-date, imports are up 55%.

“High guaranteed sugar cane prices are pressuring margins of refiners, while the fact that domestic prices are around twice as high as world market prices gives sugar consumers an incentive to import,” the bank said in a note.

China is world’s largest importer of raw sugar.

Traders are awaiting an update on the sugarcane harvest out of Brazil, the world’s largest sugar producer. Brazilian industry group Unica is expected to release the data tomorrow regarding sugar and ethanol production. The market is expecting 36.8 million metric tons of cane crush, with 2.1 million tons of sugar production in the first half of October and 1.7 billion liters of ethanol production, according to a Platts survey of analysts. That is down from 39.4 million tons of cane crush in the same period last year, and 2.3 million tons of sugar produced and 1.9 billion liters of ethanol.

In other markets, cotton for December delivery dropped 2.7% to end at 62.52 cents a pound, its biggest percentage drop in a month.

Peter Egli, director of risk management at Plexus Cotton Ltd. said weather forecasts for up to eight inches of rain in West Texas had moved prices above 64 cents a pound this week as traders anticipated flooding in the largest growing state in the United States at a time when cotton bolls are open, making the crops vulnerable to damage. Instead the region got two to three inches of rain and is now looking at dry weather.

“We rallied five cents since Oct. 1. It was a bit overextended already. But the weather kept it alive. Bull markets need constant food to keep them going,” Mr. Egli said.

Cocoa for December ended lower, down 0.2% to $3,140 a ton, frozen concentrated orange juice for January rose 0.6% to $ 1.349 a pound and arabica coffee ended down 1% at $1.1985 a pound.