Soft commodities watch: Sugar price plunges to fresh six-year trough

By: Anthony Broadfoot
Anthony Broadfoot
Anthony worked for a number of years as head of sales and marketing for stock broker companies with extensive… read more.
on Mar 30, 2015

Soft commodity futures have been trading mixed so far in today’s session with sugar rebounding from a fresh six-year low. Meanwhile, wheat futures extended their rally to a second straight session as unfavourable planting conditions in the US grain belt over the weekend prompted market participants to cover positions.

ICE Raw sugar futures for settlement in May rose 0.41 percent to 12.16 cents per lb on the ICE exchange as of 13:49 BST. The contract has rebounded from a session low of 12.01 cents hit in earlier trading, its weakest level since January 2009. The sweetener has been pressured by a weak Brazilian real which has been encouraging producers in the world’s largest grower to lock in returns from dollar-denominated sugar sales in local currency. Reuters quoted Tom McNeill, director of Green Pool Commodities, as saying:
“This market seems to be battling a reality that the real is very low, and a perception it could fall further […] At the minute, that seems like the only story in town.” At last check, May white sugar was up 0.11 percent at $360.400 per tonne, after hitting a contract low of $358.6.
Arabica futures for May settlement were down over a cent, or 0.47 percent, at $1.3725 per lb, above the 13-month low of $1.2875 per lb reached earlier in March. May robusta coffee was $11 or about 0.8 percent lower at $1,774 a tonne.
Cocoa futures held steady amid thin trading, with a quiet start to the new CME and ICE contracts. Cocoa for May delivery was flat at £1,919.00 per tonne in London, while the US benchmark was down 0.27 percent at $2,732.00 a tonne. According to a London-based cocoa futures broker quoted by Reuters: “It’s no surprise that we’ve seen low volumes in the new contracts so far […] This is a long haul game.”
In grain futures, US wheat advanced for a second straight session, rallying from its steepest drop in over eight months on Thursday. Wheat futures for delivery in May on the Chicago Board of Trade were 0.68 percent up at $5.111 a bushel, adding to Friday’s 1.7 percent gain. The commodity found support as dry weather in parts of the US grain belt threatened to reduce yields of the hard red winter crop.
Meanwhile, corn prices were trading near Friday’s settlement price at $3.911 a bushel. The commodity has remained under pressure amid ample supplies and poor demand for US cargoes.
Soybean prices have been trading in negative territory for a fifth consecutive session on the back of expectations for a bumper South American crop. May soybeans were down 0.1 percent at $9.666 per bushel, having closed 0.7 percent lower on Friday. Traders will be eyeing tomorrow’s release of the prospective plantings report from the US Department of Agriculture for further cues on market movements.
According to the Commodity Futures Trading Commission’s weekly commitments of traders report, hedge funds and money managers, increased their net short position in Chicago wheat and trimmed their net short position in soybeans.

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