Sugar futures settled slightly down Monday, after recouping most of the losses in early trade when some jittery traders closed out their bets after a surprising government report showed that bullish traders had added to their already near-record long positions last week.
Raw sugar for March delivery closed down 0.5% to 14.51 cents a pound on the ICE Futures U.S. exchange. The commodity was once down as much as 2.4% to 14.23 cents.
Marex Spectron said in a note that traders were expecting to see a reduction in the number of long positions by non- index funds from the previous week. The figures, released by the U.S. Commodity Futures Trading Commission on Friday after the sugar market closed for the weekend, showed that hedge funds and other speculators in the sugar market were net long by 156,451 contracts, an increase of 12,895 contracts over the previous week.
“Their long position is the ‘elephant in the room,’ the one big bear feature,” the firm said in a note.
Chicago-based Hightower Report also noted “an extreme overbought condition” in the sugar futures market, adding that the key support level for the March contract lies around the range between 14.10 and 14.19 cents.
However, the sugar market continued to find support from the supply side, in part due to the weather conditions. In Brazil, the world’s largest sugar exporter, its center-south growing regions may finally see some dry weather at the end of next week, according to Hightower. But it might already be too late for the harvest and crushing to reach full speed again this late in the season and after so many delays over the past few months, the report said.
Furthermore, the U.S. ending sugar stocks were also revised down by the USDA to 1.659 million tons from 1.855 million last month, putting the U.S. stocks/usage ratio at 13.5, which is well below the 15.5 that the government projected in its November report.
In other markets, arabica coffee for March dropped 1.1% to $1.199 a pound with Brazilian exports of coffee on track for a record high and a weak currency encouraging sales.
March cocoa rose 0.7% to $3,375 a ton. Frozen concentrated orange juice futures for January and cotton for March delivery were down 0.3% and 0.5%, respectively, to close at $1.4965 a pound and cotton at 63.30 cents a pound.
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