Raw-sugar futures retreated Tuesday as investors closed out bets that prices would rise ahead of the latest status report on Brazil's sugarcane crush.
"[The market is] expecting a large crush number out of [industry association] Unica and I think that's not helping things for sure," said Michael McDougall, a senior vice president at Newedge. Unica publishes a closely watched biweekly report on the progress of top producer Brazil's sugarcane crush, as well as sugar and ethanol production.
Raw sugar for March delivery on the ICE Futures U.S. exchange settled 0.41 cent, or 2%, lower at 19.65 cents a pound, the lowest settlement since Sept. 28.
Traders expect this week's Unica report to show that the pace of the crush increased for the first half of October, as weather has been favorable for harvesting and transporting the cane. More sugar would add to the global surplus of the sweetener, likely pressuring prices further.
"There is a glut of sugar on the market right now," said Sterling Smith, a market analyst at Citibank.
Sugar's losses Tuesday were "compounded by the general risk-off attitude, along with the stronger dollar and weaker equity markets," Mr. Smith added. "It's already weak so that sends the buyers onto the sidelines."
Market participants point to 19.5 cents a pound as the next important support level. But "I think we might test lower," Mr. McDougall said, citing the market's inability to hold the 20-cent level over the last two weeks.
"There is probably going to be some stop-loss selling and fund liquidation if [futures break 19.5 cents]," Mr. Smith said.
Sources from: The Wall Street Journal (Writer: Alexandra Wexler)
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