Orange Juice Tumbles to Four-Month Low; Sugar Futures Decline

Orange-juice futures tumbled to a four-month low on increasing sales by hedge funds and traders. Sugar also declined.

“The speculators are liquidating their long positions,” said Judith Ganes-Chase, a Katonah, a New York-based consultant. “There is no inflow of any positive news.”

Combined volume in the past two sessions rose to an estimated 10,489 contracts, the highest level in almost three months. Tomorrow, the U.S. Department of Agriculture may keep its estimate for Florida’s orange crop unchanged, according to a Bloomberg News survey of nine analysts.

Orange juice for May delivery fell 3.85 cents, or 3 percent, to $1.265 a pound on ICE Futures U.S., the third straight decline. Earlier, the price touched $1.2605, the lowest level for a most-active contract since Dec. 8.

The slump was the biggest among 19 raw materials in the Reuters/Jefferies CRB Index.

In the week ended March 23, hedge-fund managers and other large speculators slashed their net-long position, or bets that orange-juice futures will rise, by 21 percent, the most since June, government data showed.

Brazil is the world’s largest orange grower, followed by Florida. Crops in the state of Sao Paulo, Brazil’s most- productive region, may drop as growers lower or scrap investments in new groves because of a tree-wasting disease.

Sugar Market

Sugar fell for the third time this week on signs that higher output in Brazil and India, the world’s largest producers, will erase a global deficit.

India’s sugar output may reach 18.1 million metric tons in the year ending Sept. 30, Farm Minister Sharad Pawar said today. Three weeks ago, he forecast above 17 million. Mills in Brazil’s Center South, the source of most of the nation’s cane crop, will produce a record 34.1 million tons in the season that started April 1, an industry group has said.

“The fundamentals are weak,” said Jack Scoville, a vice president at Price Group Inc., a broker in Chicago. “The trend will remain bearish.”

Raw sugar for May delivery declined 0.24 cent, or 1.5 percent, to 15.92 cents a pound in New York. The price has plunged 41 percent this year.

The global-supply shortfall will be 12.8 million tons this year, down from 14.8 million projected in February, Czarnikow Group Ltd. said on March 24, citing higher-than-forecast output in India,, the second-biggest grower. The market will return to a surplus next year, the London-based broker said.

Debarati Roy
Source: Bloomberg