BrazilTradeBusiness:Sugar Tumbles Most Since 2008 on India, Brazil-Output Forecasts
01:13, 2010-Apr-1
By Debarati Roy
March 31 (Bloomberg) -- Sugar futures plummeted the most since 2008 on forecasts that output will increase in India and Brazil, the world’s biggest producers. Orange juice was little changed.
The plunge in sugar capped the biggest quarterly slump since 1985. Last year, the price doubled as adverse weather hurt cane crops. Today, the National Federation of Cooperative Sugar Factories Ltd. said that India’s production may jump as much as 26 percent this year. Output in Brazil’s Center South will climb 19 percent from a year earlier, an industry group said.
“Good production numbers from India and Brazil are pushing prices down,” said Michael McDougall, a senior vice president at Newedge USA, a broker in New York. “Sugar will remain muted in the short term.”
Raw sugar for May delivery tumbled 1.29 cents, or 7.2 percent, to 16.59 cents a pound on ICE Futures U.S., the biggest decline for a most-active contract since Dec. 19, 2008, and the largest drop among 19 raw materials in the Reuters/Jefferies CRB Index.
In the first quarter, the sweetener fell 38 percent, the most among CRB prices. The slump isn’t over because Brazil, the leading producer, and India, the top consumer, will harvest bumper crops next season, analysts and trader said.
The price will tumble to 13 cents at the end of the year, posting a 52 percent annual loss, said Mark Hansen, a trading director at CPM Group, a New York-based research and asset- management company.
Importers including India, Pakistan and Egypt withdrew from the market in the past two months, sending prices down as much as 47 percent from a 29-year high of 30.4 cents on Feb. 1.
Brazilian yields are beating forecasts as a waning El Nino brings dry weather, boosting prospects for a record harvest. Mills began crushing cane early after two years of heavy rains pared output, growers said.
Orange-juice futures for May delivery were little changed at $1.353 a pound in New York. The price rose 4.8 percent in the quarter, the fifth straight advance.
--With assistance from Bibhudatta Pradhan in New Delhi and Lucia Kassai in Sao Paulo. Editors: Patrick McKiernan, Steve Stroth
To contact the reporter on this story: Debarati Roy in New York at droy5@bloombe rg.net.
