Sugar Falls to Seven-Month Low on Higher Brazil, India Supplies

Sugar futures continued their freefall, dropping to a seven-month low in New York, as output increased in Brazil and India, the top producers.

Production in Brazil’s Center South, the world’s largest growing region, more than doubled in the second half of February from a year earlier, industry association Unica said today. India’s output will reach 16.8 million metric tons in the year ending Sept. 30, up 5 percent from a previous forecast, the Indian Sugar Mills Association said.

“Buyers are staying away in hopes of further price declines as the supply situation has improved.” said Jeff Bauml, a senior vice president with brokerage R.J. O’Brien & Associates in New York. “Funds have liquidated because of the gains in the dollar.”

Sugar futures for May delivery dropped 0.63 cent, or 3.1 percent, to 19.69 cents a pound on ICE Futures U.S. Earlier, the most-active contract fell 7.4 percent, touching 18.82 cents, the lowest price since Aug. 3. The commodity has plunged 11 percent this week and is down 35 percent from a 29-year high of 30.4 cents on Feb. 1.

The dollar has surged 4.9 percent against the euro this year, partly on concern that Greece’s efforts to close its budget deficit will weigh on other countries in the European Union.

Investors are the most bullish on the dollar since the collapse of Lehman Brothers Holdings Inc. in September 2008, on speculation that the U.S. economy will expand at a faster pace than in Europe and Japan, a survey of Bloomberg users showed.

By Debarati Roy
Source: Bloomberg