Sugar #11 Futures Market News and Commentary
May NY world sugar #11 (SBK20) on Thursday closed down -0.34 (-2.34%), and May London white sugar #5 (SWK20) closed down -7.10 (-1.75%).
Sugar prices on Thursday dropped to a 1-month low on weakness in crude prices and a plunge in the Brazilian real to a new record low. Crude oil prices tumbled more than 4% Thursday to a 13-3/4 month low. Lower crude prices are negative for ethanol prices and may prompt Brazil's sugar mills to divert more cane crushing toward sugar production rather than ethanol production, thus boosting sugar supplies.
The Brazilian real on Thursday fell -0.52% against the dollar and posted a new record low of 4.5002 reals/USD. A weaker real encourages export selling by Brazil's sugar producers.
An extremely large net-long position held by funds makes the sugar futures markets vulnerable to long liquidation pressure. Last Friday's Commitment of Traders (COT) data showed that funds boosted their long NY sugar positions by 96765 contracts in the... Read more