Forexpros – Sugar futures rebounded from the lowest level in two weeks on Tuesday, as ongoing concerns over crop prospects in major global producers Brazil and Mexico boosted prices.
On the ICE Futures U.S. Exchange, sugar futures for March delivery traded at USD0.2407 a pound during European afternoon trade, jumping 1.03%.
It earlier rose by as much as 1.95% to trade at a session high USD0.2421 a pound. On Monday, prices dropped to a two-week low of USD0.2380.
Sugar prices regained strength as traders focused on growing concerns over sugar crops in Brazil. The nation’s largest sugar broker Sucden Brazil said Monday that it expected only a “modest” recovery in sugarcane production across Brazil’s centre-south region.
According to the group, Brazil’s sugar harvest was projected to total approximately 520 million tonnes in the 2012-13 marketing season, less than originally estimated, as ageing cane plants make it difficult for growers to boost production.
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.
Producers in the South American country can make either sugar or ethanol from the raw material sugar cane.
Elsewhere, Mexico’s Sugar and Alcohol Chamber of Commerce said that U.S. sugar imports from Mexico, the world’s sixth largest producer, may fall to as low as 800,000 tons this season as the worst drought on record hurt crops.
Drought caused by the La Nina weather pattern in northern Mexico is harming crops. The La Nina weather pattern typically brings heavier rainfall in Asia and drier weather in Central and South America.
Mexico exported 1.42 million tons the previous crop season, according to the country’s Agriculture Ministry. The U.S. buys nearly 99% of Mexico’s sugar exports, according to the USDA.
Elsewhere on the ICE Futures Exchange, cotton futures for March delivery added 0.3% to trade at USD0.9590 a pound, while Arabica coffee for March delivery fell 0.72% to trade at USD2.1590 a pound.
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