Sugar prices hit five-week low on high Indian production data
Raw sugar futures in New York fell as much as 3.7 per cent following reports of increased output in India.
Sugar prices dropped after data indicated that Indian production is significantly outpacing the previous season, according to a report by Mint. Raw sugar futures in New York fell by as much as 3.7 per cent to their lowest intraday level since September 23.
Data from the National Federation of Cooperative Sugar Factories Ltd. showed that India produced 845,000 tons of sugar this season up to the end of October. This figure is over eight times the amount produced during the same period last year.
Delhi-based analyst Harsh Soni of Greenleaf Consultancy said that while India's strong seasonal start was not a surprise, markets react when reality strikes.
The market had previously seen price surges due to tight stockpiles in India and fears that El Niño would reduce yields. However, traders now expect lower import demand in India and more exports from Brazil due to a weakening Brazilian real.
Speculative funds have also contributed to the selloff by reducing net-long positions, which reached a four-week low through October 27, according to a CFTC positioning report.
Arnaud Lorioz, chief executive officer of Paris-based brokerage Deepcore, noted that fundamentals have not changed and questioned when the current momentum might lose speed.