Forexpros – U.S. soft futures were mixed during early U.S. morning trade on Wednesday, with sugar prices advancing on the back of concerns over a disruption to supplies from top grower Brazil.
On the ICE Futures U.S. Exchange, sugar futures for October delivery traded at USD0.2048 a pound, rallying 1.3%. It earlier rose by as much as 1.55% to trade at a session high of USD0.2061 a pound.
Prices touched a two-month high of USD0.2179 a pound on June 21, as concerns that heavy rains in Brazil could damage sugarcane crops in the country’s center-south region boosted sentiment on the sweetener.
The nation’s top sugar industry group Unica said sugar production in the center-south region in the first half of June came in at 1.37 million tonnes, 32% below the same period last year, as rains “severely hampered” the cane harvest.
Brazil’s Center South-region produces nearly 90% of the nation’s sugar. Brazil is the world’s largest sugar producer and exporter, with the USDA estimating the nation accounts for nearly 20% of global production and 39% of global sugar exports.
Market participants noted that the sugar market remains in a major bear trend. Prices are down approximately 45% since hitting a three-decade high of USD0.3594 in February of last year.
Meanwhile, Arabica coffee for September delivery traded at USD1.6403 a pound, dropping 1.1%. It earlier fell by as much as 1.85% to trade at a session low of USD1.6278. Prices hit USD1.6630 a bushel on Tuesday, the highest since May 29.
Market participants cashed out of the market to lock in gains from the previous session’s 4% rally that took prices to the highest level in nearly a month.
Coffee fell to as low as USD1.4887 a pound on June 14, the lowest for the second-month contract since mid-June 2010, as the market moved lower ahead of the harvest from Brazil.
But market analysts have noted that the approaching frost season in Brazil should limit any potential downside in coffee in the near-term.
Coffee prices have been under pressure in recent months, losing nearly 35% since mid-January as traders eyed a huge harvest in top grower Brazil and speculators pushed prices lower.
Market participants said that coffee prices remain vulnerable to losses as hedge funds and large institutional investors liquidate long positions amid concerns over the global macroeconomic outlook.
Jitters over the global economic outlook have pressured soft commodities in recent weeks.
Elsewhere, cotton futures for October delivery traded at USD0.6869 a pound, adding 0.5%. The October contract traded in between a tight range of USD0.6908 a pound, the daily high and a session low of USD0.6844 a pound.
Front-month prices slumped to a 32-month low of USD0.6617 a pound on June 4.
Market players were looking forward to a pair of government reports later in the week. On Thursday, the U.S. Department of Agriculture was to release its weekly export sales report, which would gauge cotton market conditions in the world.
Meanwhile, on Friday, the USDA was to provide data on planting, which will set the stage for how much will be planted in the coming 2012-13 marketing year.
The fiber is down almost 65% from a record in March 2011 as higher prices prompted farmers to plant more crops and demand in top consumer China slowed.
Forexpros
