Forexpros – U.S. soft futures were mixed during early U.S. morning trade on Thursday, with sugar prices falling to a one-week low after a report from Brazilian sugar industry group Unica showed harvest picked up pace in the country’s center-south region.
On the ICE Futures U.S. Exchange, sugar futures for October delivery traded at USD0.2320 a pound, dropping 0.95%.
It earlier fell by as much as 2.1% to trade at USD0.2293 a pound, the lowest since July 19.
Sugar prices have rallied in recent weeks, hitting a three-month high on July 19, as concerns that heavy rains in Brazil could damage sugarcane crops in the country’s center-south region boosted sentiment on the sweetener.
But concerns eased after Brazil’s top sugar industry group Unica said Wednesday that sugar output in the center-south region in the first two weeks of July totaled 2.63 million tonnes, up 2% from a year earlier, as rains receded.
Sugar production since the start of the harvest stood at 9.32 million tons, narrowing the gap from last year to 22%, Unica said.
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.
Sugar prices came under further pressure after India’s weather office chief said that monsoon rains will improve in the coming days, easing concerns over crop conditions in India.
Meanwhile, Arabica coffee for September delivery traded at USD1.7862 a pound, jumping 1%. The September contract rose by as much 1.25% earlier in the day to hit a session high of USD1.7907 a pound.
Prices hit a four-month high of USD1.9215 on July 11, as concerns over the impact of rains in Brazil on the crop boosted sentiment on the commodity.
Brazil is the world’s largest producer and exporter of Arabica coffee. Arabica is grown mainly in Latin America and brewed by specialty companies.
Elsewhere, cotton futures for October delivery traded at USD0.6980 a pound, adding 1%. The October contract was stuck in a trading range of USD0.7026 a pound, the daily high and a session low of USD0.6905 a pound.
Cotton traders were looking ahead to the U.S. Department of Agriculture’s weekly exports sales data later in the day to gauge the strength of global demand for U.S. supplies.
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.
A broadly weaker U.S. dollar also contributed to gains. The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.75% to trade at a one-week low of 83.03.
Market sentiment was boosted after European Central Bank President Mario Draghi said the bank will do whatever is necessary to preserve the euro.
Speaking in London, Draghi also appeared to indicate that the ECB would be prepared to intervene to lower Spanish and Italian bond yields, saying that government borrowing costs would fall within the central bank’s mandate if they interfered with the ‘transmission’ of monetary policy.
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