By Julie Wernau
Raw sugar futures dropped Monday, largely shrugging off news out of Brazil about lower production than expected.
Raw sugar for March fell 2.6% to 21.57 cents a pound on the ICE Futures U.S. exchange, on track for its lowest close since Sept. 15 and fifth session of losses.
"This is liquidation. Sugar has broken out of its range to the downside," said David Martin, managing member of hedge fund Martin Fund Management.
Data released Friday after the market closed reveal that hedge funds and other money managers hold 243,024 more bullish bets on sugar than bearish ones, an increase over the previous week's position. Sugar analysts have long warned of downside risk in the market related to its prolonged heavily bullish stance.
Production news out of Brazil failed to halt the selling. Analysts had anticipated sugar production in the first half of October to reach 2.3 million tons in the center-south region of Brazil, which produces 90% of the country's cane. Brazil is the world's largest producer of raw sugar.
Brazilian industry group Unica said center-south mills crushed 32 million metric tons of cane, a decrease of 11.9% from the same period a year earlier. They produced 2.2 million tons of sugar, up 6.8%, and made 1.4 billion liters of ethanol, a decline of 17%.
Marex Spectron said in a note that time is running out for a major upset either way in the sugar harvest with just 5 million more tons left to be produced in order to meet analyst expectations.
In other markets, cocoa for December lost 2% to $2,700 a ton, arabica coffee was down 0.7% at $1.644 a pound, frozen concentrated orange juice for January was up 0.4% at $2.14 a pound and cotton for December lost 2% to 69.37 cents a pound.
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(END) Dow Jones Newswires
October 31, 2016 11:45 ET (15:45 GMT)
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