Traders ‘Sour’ On Sugar For First Time In 20 Months
While most of the world’s eyes have been gazing spellbound at the collapse of industrial metals as Chinese liquidity dries up, there is another major commodity that has been crushed in the last few months. Sugar prices are down over 30% from their recent highs and for the first time since September 2015, speculators are net short…
Raw sugar futures have fallen for 13 straight weeks, the longest run since data on the contract begins in 1961.
“When you see a market inflating like a balloon, then, of course, what’s going up is also going down,” Claudiu Covrig, a senior sugar analyst at Platts Kingsman, said by phone. “I was expecting this low, but how low can we go next?”
Additionally, the so-called ‘breakfast commodities’ rolled over a while back with coffee and cocoa prices also at multi-year lows.
Speculators, excluding index funds, held a net short position of 17,254 contracts in the week to May 2 and Societe Generale SA estimates bearish bets since then have probably grown further to more than 25,000 lots.
“Concerns over limited Indian imports, as well as the risk of potentially higher duties on Chinese sugar imports, has not been positive for sentiment,” Warren Patterson, a strategist for ING Groep NV, said in a report.
Output is poised to exceed demand by 3.14 million metric tons in the 2017-2018 season, according to Platts Kingsman. Sugar quotas in the European Union will also end later this year, and producers are getting ready to unleash more supply even as consumption growth slows.
Source: http://silveristhenew.com/2017/05/08/traders-sour-on-sugar-for-first-time-in-20-months/
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