Sugar futures settled lower on Tuesday as investors try to make sense of the commodity market. Sugar prices, which have rallied 20% since September, are facing pressure on funds slashing their net long positions and a paucity of fresh fundamentals.
March sugar futures dipped 0.08 cents, or 0.55%, to 14.37 cents per pound at 19:38 GMT on Tuesday on the US ICE Futures exchange. Sugar has shed about 1% so far this month, but it is still up 7% year-to-date.
Investors are combing through the various industry developments this week. Sugar dealers have stated that the global market is facing deteriorating crop conditions in several key growing regions in Western Europe.
Associated British Foods confirmed in a recent update that output in the United Kingdom would be only 900,000 tons in 2020, down from 1.19 million tons in 2019. British Sugar’s parent company attributed to virus yellows on sugar beet
France’s Ministry of Farming slashed its forecast for the nation’s 2020-2021 sugar beet harvest, alluding to crop disease and droughts outhout the country.
It is also unclear if Brazil will nudge farmers in in the direction of cane production in order to enhance the outlook for next year’s sugar output. India, meanwhile, is debating if it will subsidize exports in the 2020-2021 marketing season. If the cash-strapped government fails to do so, sugar volume exports could slump until the second quarter of next year.
New data from the Commodity Futures Trading Commission (CFTC) and its weekly commitments of trader report highlighed that hedge funds and money managers are scaling back their long positions in sugar. A comparable trend is forming in the soybean and corn market, suggesting that either the smart money is betting on a downward trend for agriculture or institutional investors are taking profits early.
In other agricultural commodities, January corn futures dropped $0.0375, or 0.88%, to $4.2025 per pound. January wheat futures slumped $0.0775, or 1.34%, to $5.6975 a bushel. January soybean futures plunged $0.125, or 1.08%, to $11.46 per bushel.