ICE sugar higher on concerns of Brazilian dry weather
Published: 05/15/2018, 5:17:06 PM
Raw sugar futures rose on Tuesday, lifted by speculative short-covering in light volume and lingering worries about dry weather in top grower Brazil, according to Reuters.
ICE July raw sugar was up 0.11 cents, or 1%, at 11.37 cents per lb by 1135 GMT.
Dealers pointed to light short-covering by funds, who remain heavily bearish in the commodity.
Participants were also monitoring weather in Brazil, where light rains are expected later this week but may not be enough to ease a recent dry spell, dealers said.
However, gains were capped by the possibility that a recent sharp weakening in the Brazilian real will inspire a wave of producer hedging, dealers noted.
A weaker currency improves returns in local terms and encourages Brazilian producers to hedge their supplies.
“The Brazilian real collapsed last night to a new low, giving more ammunition for the sugar bears,” Sucden Financial’s Tom Kujawa said in a note.
Focus also remained on ample global supplies, although there were signs low prices are filtering through to production.
Thailand has allocated an additional 300,000 tonnes of raw sugar for ethanol production this year, amid weak prices and a large global surplus of the commodity.
ICE August white sugar rose US$0.60, or 0.2%, to US$321.70 a tonne.