maverick
30-05-2008, 07:30 AM
Sugar futures tumbled to a seven-month low on Thursday as investors bet that a glut in supplies will push prices down until major sugar-growers like Brazil and India scale back production.
Other commodities traded lower in a broad sell-off led by a steep drop in crude oil prices and a stronger dollar. Gold, silver, copper and agriculture futures all fell sharply.
The sugar market expects a surplus of 11 million metric tons this year after growers ramped up production to cash in on high world prices. However, export demand has fallen in recent months, leaving some countries with more sugar than they can sell.
Top producer Brazil, which accounts for 20 percent of world sugar output, is expected to produce 33.7 million tons in 2008-09, up 1.6 million tons from the previous year, the U.S. Department of Agriculture said in a report this month.
"The sugar market is in a huge surplus ... and demand is unlikely to rise at a faster pace," said Rohit Savant, analyst with CPM Group in New York.
Sugar futures for July delivery fell 0.14 cent to settle at 9.97 cents a pound on the New York Intercontinental Exchange, or ICE, after earlier falling to 9.84, the lowest since October.
Sugar futures are off nearly 35 percent from their contract high of 15.21 cents a pound, reached March 7. Rising ocean freight costs, which have cut into the profits of sugar-exporting countries, are also weighing on prices.
Savant said prices could fall further, discouraging major producers from planting sugar cane until existing stocks are depleted. India, the world's second-largest producer after Brazil, already has started shifting acres from sugar cane to wheat and other grains, Savant said.
"There's definitely a shift away from sugar in India," he said. "Brazil likely won't make the switch just yet because of ethanol." Sugar is a major feed stock for fuel-ethanol.
Other agriculture futures mostly traded lower Thursday. Wheat for July delivery shed 15.5 cents to settle at $7.435 a bushel on the Chicago Board of Trade, while July corn lost 10.25 cents to settle at $5.8225 a bushel.
Soybeans for July delivery plunged 50 cents to settle at $13.2275 a bushel on the CBOT, while rough rice futures rebounded to settle 40 cents higher at $18.85 per 100 pounds.
In energy futures, oil prices tumbled more than $4 after the Energy Department reported a surprise drop in crude oil and gasoline supplies last week. The agency said the drop in crude inventories was due to temporary delays in unloading oil tankers along the Gulf Coast. A stronger dollar and concerns about gas demand also weighed on prices.
Light, sweet crude for July delivery fell $4.41 to settle at $126.62 a barrel on the New York Mercantile Exchange. It was the lowest settlement in two weeks and the biggest single-day price drop since March 19.
The drop in gasoline supplies pushed July gas futures to a trading record of $3.52 a gallon on the Nymex, but the contract later retreated to settle 4.34 cents lower at $3.4042 a gallon. July heating oil futures, meanwhile, fell 13.58 cents to settle at $3.6885 a gallon.
In precious metals, gold futures plunged after the dollar gained against the euro, weakening demand for the metal traditionally viewed as a hedge against inflation. Gold for June delivery fell $23.30 to settle at $877.20 an ounce on the Nymex, after earlier dropping to $872.10 an ounce.
Other precious metals also fell. July silver lost 90 cents to settle at $16.515 an ounce on the Nymex, while July copper fell 13.65 cents to settle at $3.5585 a pound.
Other commodities traded lower in a broad sell-off led by a steep drop in crude oil prices and a stronger dollar. Gold, silver, copper and agriculture futures all fell sharply.
The sugar market expects a surplus of 11 million metric tons this year after growers ramped up production to cash in on high world prices. However, export demand has fallen in recent months, leaving some countries with more sugar than they can sell.
Top producer Brazil, which accounts for 20 percent of world sugar output, is expected to produce 33.7 million tons in 2008-09, up 1.6 million tons from the previous year, the U.S. Department of Agriculture said in a report this month.
"The sugar market is in a huge surplus ... and demand is unlikely to rise at a faster pace," said Rohit Savant, analyst with CPM Group in New York.
Sugar futures for July delivery fell 0.14 cent to settle at 9.97 cents a pound on the New York Intercontinental Exchange, or ICE, after earlier falling to 9.84, the lowest since October.
Sugar futures are off nearly 35 percent from their contract high of 15.21 cents a pound, reached March 7. Rising ocean freight costs, which have cut into the profits of sugar-exporting countries, are also weighing on prices.
Savant said prices could fall further, discouraging major producers from planting sugar cane until existing stocks are depleted. India, the world's second-largest producer after Brazil, already has started shifting acres from sugar cane to wheat and other grains, Savant said.
"There's definitely a shift away from sugar in India," he said. "Brazil likely won't make the switch just yet because of ethanol." Sugar is a major feed stock for fuel-ethanol.
Other agriculture futures mostly traded lower Thursday. Wheat for July delivery shed 15.5 cents to settle at $7.435 a bushel on the Chicago Board of Trade, while July corn lost 10.25 cents to settle at $5.8225 a bushel.
Soybeans for July delivery plunged 50 cents to settle at $13.2275 a bushel on the CBOT, while rough rice futures rebounded to settle 40 cents higher at $18.85 per 100 pounds.
In energy futures, oil prices tumbled more than $4 after the Energy Department reported a surprise drop in crude oil and gasoline supplies last week. The agency said the drop in crude inventories was due to temporary delays in unloading oil tankers along the Gulf Coast. A stronger dollar and concerns about gas demand also weighed on prices.
Light, sweet crude for July delivery fell $4.41 to settle at $126.62 a barrel on the New York Mercantile Exchange. It was the lowest settlement in two weeks and the biggest single-day price drop since March 19.
The drop in gasoline supplies pushed July gas futures to a trading record of $3.52 a gallon on the Nymex, but the contract later retreated to settle 4.34 cents lower at $3.4042 a gallon. July heating oil futures, meanwhile, fell 13.58 cents to settle at $3.6885 a gallon.
In precious metals, gold futures plunged after the dollar gained against the euro, weakening demand for the metal traditionally viewed as a hedge against inflation. Gold for June delivery fell $23.30 to settle at $877.20 an ounce on the Nymex, after earlier dropping to $872.10 an ounce.
Other precious metals also fell. July silver lost 90 cents to settle at $16.515 an ounce on the Nymex, while July copper fell 13.65 cents to settle at $3.5585 a pound.