Brent crude (NYMEX:SCF15) prices last week plunged below $70 a barrel for the first time since 2010 as the Organization of the Petroleum Exporting Countries took no action to ease a global supply glut. That helped to propel the Bloomberg Commodities Index of 22 raw materials to a five-year low.
“Funds are getting out of most commodities,” Naim Beydoun, a broker at Swiss Sugar Brokers in Rolle, Switzerland, said by phone today. “With oil prices falling, they fear deflation and this is bearish for commodities including sugar.”
White sugar for March delivery fell as much as 1.1% to $396.10 a metric ton, the lowest for a most-active contract since April 2009. The commodity traded at $398.20 at 2:07 p.m. on ICE Futures Europe in London. Crude oil stabilized this week.
The world sugar market was in surplus for four consecutive seasons through 2013-14, according to the International Sugar Organization. Supply also will exceed demand by 473,000 tons in the current season, while 2015-16 may see the start of a “new deficit phase,” according to the London-based organization.
Demand has been weak for almost two years, according to Beydoun. “This is going to put a lot of the newest refineries in difficulty,” he said.
Raw sugar for March delivery dropped 0.3% to 15.20 cents a pound on ICE Futures U.S. in New York, declining for a second day. Futures trading volumes were 21% higher than the average for the last 100 days for this time of day, according to data compiled by Bloomberg.
Robusta coffee for January delivery rose 0.6% to $2,047 a ton in London. Arabica coffee futures for March delivery advanced 0.9% to $1.8505 a pound in New York.
Cocoa for March delivery was little changed at 1,903 pounds ($2,984) a ton in London. Cocoa for delivery the same month was little changed at $2,863 a ton in New York.