Raw sugar futures on ICE eased to a 2-1/2 year low on Tuesday, maintaining their downtrend on expectations of a bumper crop from top producer Brazil as the harvest there got under way.
Arabica coffee crept lower in heavy volume on May/July spreading, while ample Brazilian supplies continued to add pressure. Liffe robusta coffee extended its decline, reaching a six-week low.
Cocoa futures on ICE Futures U.S. and Liffe were mixed.
Sugarcane mills are beginning to crush Brazil’s main center-south cane crop, estimated at a record 600 million tonnes, which dealers say is expected to keep a lid on sugar prices.
“The market is still in a downtrend … but we wonder whether we might be close to a floor at current levels,” said Tobias Merath, global head of commodity research at Credit Suisse, noting that infrastructure bottlenecks in Brazil could underpin prices.
By all accounts, logistics will be challenging for any Brazilian exporter over the next six months. The record sugar output will be 6 percent bigger than last year. A record soy crop will be 24 percent bigger, and exports of a record corn crop have doubled to more than 20 million tonnes over the past year.
May raw sugar futures closed down 0.10 cent, or 0.6 percent, at 17.59 cents a lb, just above the 2-1/2 year low of 17.50 cents hit earlier in the session.
“The Brazil sugar season is technically upon us now and, as the starter pistol is fired, there is conjecture that sugar may well be slow to come out because of logistical issues,” Thomas Kujawa of brokerage Sucden Financial said.
Sugar prices have more than halved since February 2011 as consecutive global surpluses have created a supply glut.
“Sugar is an over-supplied market and that’s what triggered the downtrend in the last few months. The question is, has it fallen far enough.” Merath said.
May white sugar on Liffe settled down 90 cents, or 0.2 percent, at $502.40 a tonne.