Raw Sugar Falls as Traders Focus on Rains in Brazil
Raw sugar futures dropped on Monday as forecasts for rainfall in Brazil next week brought relief after a price rally. While irregular showers are expected over the coming days, widespread rain in Brazil’s southeast is anticipated. The drought continues to threaten crops like sugarcane and coffee. The October raw sugar futures contract could settle with a delivery of 1.25 million tons.
Raw sugar futures retreated as the prospect for rainfall aiding crops at top exporter Brazil next week brought some relief after prices rallied this month.
Showers over most of the Brazilian territory are still set to be irregular for the coming days, but widespread rains are seen reaching producing areas in Brazil’s southeast next week, Rural Clima meteorologist Marco Antonio dos Santos said.
While that should bring relief after a long period of dry weather and high temperatures that hurt yields for both sugar cane and arabica coffee crops, markets are expected to remain volatile.
“Drought across much of Northern and Central Brazil has and will continue to threaten the supply outlook across a multitude of agriculture commodities including sugarcane, soybeans, corn, cotton and coffee until the wet season materially arrives,” analysts at JPMorgan wrote in a Monday note.
The most-active raw sugar contract lost as much as 2.2% on Monday, before paring declines. Arabica coffee dropped as much as 1.9% before erasing losses and climbing as much as 1%.
Monday is also marked by the expiration of October raw sugar futures. The open interest for the contract signals that traders could deliver about 1.25 million tons to settle the expiring contract, said Michael McDougall, a partner at McDougall Global View. That’s less than half the record delivery seen last year, but still higher compared to volumes seen in 2021 and 2022.
To read more about the news about the Sugar Industry continue reading Agriinsite.com
