Sugar Futures Rise Amid Wet Weather in Brazil
May 22 2017 - 2:17PM
Dow Jones News
By Carolyn Cui
Sugar futures gained Monday, as traders expected the wet weather
in Brazil over the weekend to hamper production and transportation
of the sweetener.
Raw sugar for July delivery added 0.8% to settle at 16.51 cents
a pound on the ICE Futures U.S. exchange.
The sugar market showed some signs of calmness after a volatile
week in which a political scandal hit Brazilian president Michel
Temer and caused the country's financial markets to tumble. Sugar
also dropped before rebounding along with Brazilian markets on
Friday.
Over the weekend, Mr. Temer denied any wrongdoing and demanded
that the senate end the investigations against him, despite
mounting calls for his impeachment. Brazil's Ibovespa stock index
was down 1.8%, and the real also weakened 0.5% against the U.S.
dollar.
A weaker real helps sugar mills in Brazil fetch more revenue in
local-currency terms. "Many mills with professional financial
management increased their fixations for 2018/2019 a little, taking
advantage of the sudden hike of the dollar in face of the political
turbulence," wrote Arnaldo Luiz Correa, a consultant at Archer
Consulting, in a note to clients.
On the other hand, Monday's gains were also underpinned by wet
weather expected over the weekend in central-south Brazil cane
areas. Forecasts for the second half of May are for more than
double the average rainfall over the two-week period, and this will
cause delay both in harvesting and in shipping from the ports
should they be affected, according to Sucden Financial
Research.
Global production for the current marketing year is up 9 million
tons to a record 180 million tons, but stocks are down 2% to 38
million tons, as lower stocks in China and Mexico more than offset
higher stocks in Pakistan, according to the U.S. Department of
Agriculture. This drawdown, plus record exports, will support
relatively flat consumption at 172 million tons.
In other markets, cocoa for July added 0.4% to close at $2,035 a
ton, arabica coffee for July was off 1.1% to settle at $1.3060 a
pound, frozen concentrated orange juice for July lost 2.6% to end
at $1.3605 a pound, and July cotton fell 1.3% to settle at 78.39
cents a pound.
Write to Carolyn Cui at carolyn.cui@wsj.com
(END) Dow Jones Newswires
May 22, 2017 15:02 ET (19:02 GMT)
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