Sugar Posts Biggest One-Day Rally in A Year
Category: Sugar
(Nasdaq) – Sugar staged the biggest one-day rally in more than a year Thursday as funds rushed to cover their bearish bets in the wake of stronger-than-expected U.S. economic growth numbers.
On the ICE Futures U.S. exchange, raw sugar futures for October delivery rallied 5% to 11.06 cents a pound. Sugar prices have recovered 6.4% since Aug. 24 when they tumbled to the lowest level in seven years.
“To me, it’s just short covering,” said Nick Gentile, managing partner at NickJen Capital Management, a commodity risk management firm. “There’s no fundamental news out today (on sugar).”
Soft commodities were hammered in recent days amid a sharp selloff sweeping global financial markets, as traders were assessing the prospect of a slower Chinese economy and the ensuing disinflationary impact on the global growth.
Some participants in the commodity markets, especially those long-only funds, have liquidated their positions fearing slower demand for commodities could hurt prices even further.
At the same time, speculators swooped in to place bearish bets amid growing concerns about Chinese growth. Demand for sugar has been slowing in developed markets, but rising in emerging markets. But some have questioned whether China’s appetite for sugar will remain strong in light of the recent devaluation of its currency amid slowing economic growth and rocky financial markets.
“The roller-coast ride is going to continue for a little while now. It’s tough to take any long-term view on any commodity right now,” Mr. Gentile said.
In other markets, arabica coffee rose 1.9% to $1.2455 a pound and orange juice rose 3.5% to $1.2635 per pound. Cotton futures for the most-actively traded December contract edged up 1.3% to 63.35 cents a pound. Cocoa rose 0.4% to $3,109 a ton.
