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Sugar futures tumble on speculation of ample global supplies

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Forexpros - Sugar futures were down sharply for a second day on Thursday, hitting a one-week low amid speculation increased production in Europe and Asia would compensate for production losses in Brazil, the world's largest producer.

On the ICE Futures U.S. Exchange, sugar futures for October delivery traded at USD0.2897 a pound during European morning trade, tumbling 2.83%.

It earlier fell as much as 2.92% to trade at USD0.2894 a pound, the lowest price since August 19.

Leading agribusiness financial service provider Rabobank lowered its forecast for total global sugar stockpiles for the 2011-12 marketing season by a mere 300,000 tons to 9.5 million tonnes.

The modest revision was significantly higher than many recent estimates, easing concerns over tightening global supplies.

Last week, the International Sugar Organization forecast global supplies to total 4 million tonnes, while the U.S. Department of Agriculture projected world stockpiles to reach 6.5 million tonnes.

In its quarterly sugar report published Wednesday, Rabobank said that it expected "significant increases" in sugar output in Europe, boosted by prospects for an "excellent" harvest in Germany.

Sugar production in India, the world's second largest sugarcane grower, was forecast to rise 6% from a year earlier to 26.0 million tonnes, citing a "promising" start to the country's monsoon season.

Sugar prices rose as much as 17% over the past two weeks, climbing to a nine-month high of USD0.3184 a pound on August 24 amid concerns Brazilian sugar output will be lower than initially estimated.

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.

Elsewhere, on the Chicago Mercantile Exchange, wheat for September delivery fell 0.68% to trade at USD7.4350 a bushel, corn for September delivery shed 0.53% to trade at USD7.2600 a bushel, while soybeans for September delivery dipped 0.53% to trade at USD13.7950 a bushel.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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