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Sugar futures hit 3-month low on upbeat Brazil crop prospects

Published 04/16/2012, 08:02 AM
Investing.com - Sugar futures extended heavy losses from the previous session on Monday, falling to the lowest level since mid-January as upbeat prospects over Brazil’s upcoming sugar harvest and fears over a slowdown in demand from top consumer China continued to weigh on the sweetener.

On the ICE Futures U.S. Exchange, sugar futures for May delivery traded at USD0.2324 a pound during European afternoon trade, shedding 0.45%.

It earlier fell by as much as 0.5% to trade at USD0.2323 a pound, the lowest since January 13.

Sugar prices tumbled nearly 4% on Friday after Unica, Brazil’s sugar industry association, projected that the nation’s center-south crop would yield 33.1 million tonnes of sugar in the upcoming 2012-13 season, up 5.7% from a year earlier.

The agency pegged the centre-south cane crush at 509 million tonnes.

Crops in the Brazil’s center-south region produce nearly 90% of the nation’s sugar and ethanol.

The Unica forecast came after Brazil's government crop agency Conab estimated that the country's sugar production would rise to 38.9 million tonnes in the 2012-13 marketing year.

Sugar traders have been monitoring sugar cane crop conditions in Brazil in recent weeks, as the upcoming cane harvest in center-south region is due to begin in early May.

Brazil is the world’s largest sugar producer and exporter, with the U.S. Department of Agriculture estimating the nation accounts for nearly 20% of global production and 39% of global sugar exports.

Also weighing on market sentiment were Chinese growth figures released on Friday, showing that the Chinese economy grew at the slowest pace in almost three years in the first quarter.

Official data showed that the Chinese economy grew by 8.1% in the three months to March, disappointing expectations for an 8.3% increase, after recording an expansion of 8.9% in the fourth quarter.

China is the world’s largest sugar consumer. Fears over a slowdown in demand from the Asian nation have weighed on prices in recent weeks.

Sugar prices have been under pressure in recent weeks, losing nearly 12% since March 20, as increasing competition for U.S. exports and ample global supplies have been dominating sentiment.

Elsewhere on the ICE Futures Exchange, cotton futures for May delivery fell 0.85% to trade at USD0.9131 a pound, while Arabica coffee for July delivery rose 0.2% to trade at USD1.8018 a pound.

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