Raw-sugar futures posted the biggest drop in almost four weeks on speculation that a U.S. plan to purchase surplus supplies of domestic sweetener will do little to end a global glut. Arabica coffee rose.
The London-based International Sugar Organization said on May 22 that global production will exceed consumption by 10 million metric tons in the 12 months ending Sept. 30. The U.S. Department of Agriculture said yesterday it will spend $38 million to reduce a domestic glut by 300,000 short tons (272,155 metric tons). Sugar futures are down 3.4 percent since the end of March, heading for a fifth straight quarterly decline.
“I don’t see too much bullish information on sugar, and we’re going to have a global surplus,” Michael Smith, the president of T&K Futures & Options in Port St. Lucie, Florida, said in a telephone interview. “This downturn doesn’t have anything to stop it yet.”
Raw sugar for delivery in October fell 1.1 percent to close at 17.06 cents a pound at 2 p.m. on ICE Futures U.S. in New York, the biggest drop for a most-active contract since May 22. Smith said the commodity will touch 14 cents by year end.
Yesterday, the price reached 17.3 cents, the highest since May 13, after the USDA announced its plans to buy domestic sugar.
Arabica-coffee futures for September delivery rose 0.2 percent to $1.235 a pound. Prices still are down 14 percent since the end of December, after earlier today touching $1.2215, the lowest since September 2009.