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Current Position:Home » News » Condiments & Ingredients » Ingredients » Topic

Raw Sugar Prices Drop as Brazilian Currency Fades

Zoom in font  Zoom out font Published: 2015-12-23  Views: 167
Core Tip: Raw sugar futures reversed course on Monday, ending lower as political and economic news out of Brazil hurt the currency of the world’s largest sugar producer.
Raw sugar futures reversed course on Monday, ending lower as political and economic news out of Brazil hurt the currency of the world’s largest sugar producer.

Raw sugar futures for March delivery fell 0.9% to end at 14.97 cents a pound on the ICE Futures U.S. exchange.

The real was down 0.8% recently against the dollar.

“The political and economic situation in Brazil is truly chaotic, with the country watching the loss of its investment grade and heading for an inflation-rate increase and exchange-rate volatility,” Arnaldo Luiz Correa, manager partner at Archer Consulting, said in a note.

Analysts at the sugar desk at Marex Spectrum said they expect raw sugar futures to be stuck in a trading range between 14 and 15.50 cents a pound for the March contract, the most actively traded.

Higher prices, the firm said, would encourage Brazilian producers to increase sugar production, encourage exports out of India, the world’s second-largest sugar producer, and reduce imports from China, adding surplus sugar to the market, which would conspire to again drop prices.

“So we have a potential swing of more than 10 million tons, which is more than enough to prevent any surplus or deficit,” the firm said.

In reais, raw sugar prices marked a new all-time high today, said Michael McDougall, head of the Brazil desk at Societe Generale.

“The question is, will they react to these extraordinary prices by increasing investment or will the falling real only make things financially more complicated by making the dollar based debt more difficult to pay?” he wrote in a note.

In other markets, arabica coffee futures for March delivery dropped 1.3% to end at $1.175 a pound, cocoa for March ended down 0.4% at $3,239 a ton, March cotton fell 0.6% to 63.32 cents a pound, and frozen concentrated orange juice futures for January fell 0.1% to end at $1.437 a pound.
- See more at: http://ingredientnews.com/articles/raw-sugar-prices-drop-as-brazilian-currency-fades/#sthash.YX6oxVYH.dpuf
 
 
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