Forexpros – U.S. sugar and cocoa futures came under heavy selling pressure during early U.S. morning trade on Monday, with sugar prices tumbling to the lowest level since May 2011, while cotton prices edged modestly higher, bucking the downward trend across most of the commodities complex.
Farm commodities were affected by outside influences on Monday, as appetite for riskier assets came under pressure amid mounting fears over the outlook for global economic growth.
Weak manufacturing data out of the euro zone and China, combined with political uncertainty in France and the Netherlands prompted investors to shun riskier assets, such as stocks and commodities, and flock to traditional safe haven assets like the U.S. dollar.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.45% to trade at 79.63.
A stronger dollar reduces the appeal of U.S. crops to overseas buyers and makes commodities less attractive as an alternative investment.
On the ICE Futures U.S. Exchange, sugar futures for July delivery traded at USD0.2161 a pound during early U.S. morning trade, tumbling 1.9%.
It earlier fell by as much as 2.1% to trade at USD0.2157 a pound, the lowest since May 23, 2011.
Prices are down approximately 40% since hitting a three-decade high of USD0.3594 in February of last year.
Sugar prices have been under pressure in recent weeks, losing nearly 18% since March 20, as increasing competition for U.S. exports and ample global supplies have been dominating sentiment.
Meanwhile, market players shrugged off concerns over cane production in Brazil’s key centre-south region after Swiss-based industry research group Kingsman cut its crop estimate for the region by 10 million tonnes to 510 million tonnes.
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. The region is responsible for almost 90% of sugar output in Brazil.
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.
Meanwhile, cocoa futures for July delivery traded at USD2,243.50 a metric ton, shedding 0.8%.
It earlier fell by as much as 1.45% to trade at a session low of USD2,235.50 a metric ton. Prices dropped to a three-month low of USD2,056.50 on April 11.
Prices were weighed by upbeat crop prospects in top grower Ivory Coast as well broader market risk aversion.
The mid-season crop in Ivory Coast, which produces more than one-third of the world’s cocoa, is harvested from April to September.
Elsewhere on the ICE Futures U.S. Exchange, cotton futures for July delivery traded at USD0.9113 a pound, easing up 0.15%. It earlier rose by as much as 0.35% to trade at a session high of USD0.9134 a pound.
Cotton traders were looking forward to the U.S. Department of Agriculture’s weekly planting progress report after Monday’s closing bell.
In its last update, the USDA said 13% of U.S. cotton crops were planted as of April 15. In Texas, the largest cotton-growing state in the U.S., 18% of the cotton crop was planted, higher than the five-year average of 13% for this time of year.
The U.S. is the world’s biggest exporter of cotton and the third largest producer of the fiber, trailing only China and India.
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