Sugar futures dived Wednesday after prices moved below key support levels, triggering orders to sell over fears of a strong move lower.
Raw sugar for October fell 1.4% to 19.25 cents a pound on the ICE Futures U.S. exchange, on track for its lowest close in a month.
But recent data are showing signs that sugar's bullish run may be slowing. The week of June 28, bets on higher prices by hedge funds and other money managers outweighed bearish bets by 245,329 contracts, the most on record. Since then, the bulls have begun pulling back and outweighed the bears by 228,725 contracts as of last Tuesday, according to the latest data from the U.S. Commodity Futures Trading Commission.
Meanwhile, improving weather in Brazil, the largest sugar producer, has also altered the mood of the sugar market, leading Kingsman, a unit of S&P Global Platts, to lower its forecast for the season's sugar shortage last week to 4.88 million tons. Production improved significantly in the second half of June and traders are awaiting news about July's prospects.
"The trends are still sideways for the short term," said Jack Scoville, vice president of Price Futures Group in Chicago.
Producers in Brazil recently indicated at a conference that they aren't planting at the same pace as in the past because of financial problems and the bulls are expecting that Brazil's sugar harvest will begin to see signs of wear later in the season as a result.
In other markets, cocoa for September was up 0.6% at $2,868 a ton, arabica coffee futures slumped 0.7% to $1.406 a pound, frozen concentrated orange juice for September delivery was up 0.4% at $1.9395 a pound and December cotton rose 1.1% to 74.75 cents a pound.
