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Sugar Futures Jump amid Global Surplus

July 6, 2017 at 16:39 by Andrew Moran

Sugar prices are posting modest gains on Thursday despite the commodity facing an international surplus. Sugar futures have remained relatively quiet all week, many attributing this to investors maintaining soft trading level because of the US holiday on Tuesday.

October sugar futures rose 0.09 cents, or 0.66%, to 13.81 cents per pound at 16:25 GMT on Thursday on the ICE Futures exchange. Sugar has had a rough start to July as the sweetener has dropped 1.6%. Year-to-date, sugar prices have plummeted more than 26%, and there is no relief in sight.

The sugar market has been transitioning into a global surplus this year. According to various estimates, the 2017–2018 international crop will beat demand by 2.7 million tons.

Sugar futures have been trading lower amid a decline in crude oil prices. Investors are anticipating that producers will gradually convert from cane to sugar rather than ethanol. When fuel prices are higher, they push up ethanol, which then prompt producers to increase their conversation rates of cane to ethanol. In recent weeks, ethanol prices have been trading around 13 cents a pound.

Meanwhile, it was reported that Brazil’s sugar production spiked by nearly double in the first half of June. The nation’s center-south mills produced 2.4 million tons of sugar, up close to 98% from the same time in 2016.

Although sugar has rebounded from 16-month lows over the last week, the sweetener has yet to maintain any momentum, even with the US and Mexico governments signing a trade agreement that would benefit both nations’ sugar industries.

Other commodities are bleeding red ink as the trading week comes to an end. September orange juice futures tumbled $0.021, or 1.51%, to $1.37 per pound. September wheat futures dipped $0.20, or 3.75%, to $5.39 a bushel. September coffee futures dropped $0.095, or 0.73%, to $1.29 a pound.

If you have any questions and comments on the commodities today, use the form below to reply.

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