Forexpros – Sugar futures declined on Tuesday, dropping to the lowest level since early June as ongoing concerns over a slowdown in Chinese demand continued to weigh on sentiment.
On the ICE Futures U.S. Exchange, sugar futures for March delivery traded at USD0.2389 a pound during European afternoon trade, dropping 1.2%.
It earlier fell by as much as 1.35% to trade at USD0.2386 a pound, the lowest since June 7.
Sugar prices have declined in seven of the last nine trading sessions and have lost nearly 8% since the beginning of November, as increasing competition for U.S. exports has been dominating sentiment in recent weeks.
Earlier in the day, Peter Baron, executive director of the International Sugar Organization said that China was likely to increase sugar purchases from India in the 2011-12 marketing year that began October 1.
Speaking at an industry event in India, Mr. Baron said that India was “ideally positioned” to boost sugar exports to China, citing “a freight advantage and huge surplus stocks”, as well as cheaper local prices.
According to Mr. Baron, total Chinese sugar imports will rise to 2.7 million tons in 2011-12 from 2.1 million tons in the previous marketing year. He did not give any estimates for imports by China from India, saying it would be “speculative.”
China is the world’s largest sugar consumer, while India is the world’s second largest sugar producer. It exported approximately 2.6 million tons of the sweetener in the 2010-11 marketing year.
Mr. Baron added that global raw sugar prices are likely to remain steady in the range of USD0.2400 and USD0.2500 a pound.
Meanwhile, prices found support as the dollar index declined 0.15% to trade at 78.34, as markets continued to eye developments surrounding the U.S. and the euro zone’s debt woes.
A weaker dollar boosts the appeal of U.S. crops to overseas buyers and makes commodities more attractive as an alternative investment.
Elsewhere on the ICE Futures Exchange, cotton futures for December delivery climbed 0.95% to trade at USD0.9126 a pound, while Arabica coffee for March delivery shed 0.1% to trade at USD2.3653 a pound.
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