ICE sugar hits 3-year low ahead of Unica data

ICE raw sugar futures eased to their lowest level in about three years, pressured by a huge harvest in top grower Brazil, before the release of Brazilian cane industry data due later on Tuesday.

Arabica coffee dropped under pressured from surplus supply, and ICE cocoa was down in light volume against a backdrop of favourable crop weather in West Africa.

July raw sugar futures on ICE fell 0.15 cent, or 0.92 percent, to 16.23 cents a lb by 11:38 a.m. EDT (1538 GMT), having earlier eased to 16.18 cents, the lowest for the front month since July 2010.

Dealers anxiously awaited data from Brazilian cane industry group Unica at 1700 GMT for trends in the allocation of Brazilian cane to sugar andethanol biofuel.

Some traders said that if the allocation of Brazilian cane favoured sugar instead of ethanol, this could be a signal for further declines in sugar prices.

“What the market wants to see is a mix running at well below 42 percent sugar to prove millers are favouring ethanol production and reducing sugar output,” said Nick Penney of broker Sucden Financial Sugar.

“This may be a catalyst for some short covering, given the spec short position and the oversold condition of the market. We shall see.”

Michael McDougall, a vice president for brokers Newedge USA in New York, pointed out that UNICA’s second half of its May crush progress report has a range of crush estimates “that are all over the place with 32.5 to 39 million tons being cited by reputable groups.”

He noted that the end of the two week period saw several days of rain that impacted the heart of Brazil’s Center South.

August white sugar on Liffe was down $1.9 or 0.4 percent at $477.30 a tonne, with volume of 1,2,573 lots.

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