By Julie Wernau
Sugar prices ended higher Wednesday following six sessions of steady selling on the part of money managers who have been heavily bullish for several months.
Raw sugar for March delivery rose 2.4% to end at 21.70 cents a pound on the ICE Futures U.S. exchange, its first move higher since Oct. 24.
"Funds will most likely still be shown this Friday still holding the bulk of their long (positions). Whether that will be seen as positive or negative is the question," said Mike McDougall, director commodities agency at Societe Generale in New York.
Raw sugar prices reached a more than four-year high in early October at 23.81 cents a pound, but has since shed 8.9% as speculators in the market scale back from a record net high position reached last month.
Analysts said Wednesday's support in the sugar prices comes from more bullish estimates for the 2016/2017 sugar production picture. Trading firm Czarnikow said it expects demand for the sweetener to outstrip demand by 9.8 million tons and that in order to incentivze sugar production, the price needs stay above 20 cents a pound in the long-term. Under that premise, the price of sugar isn't high enough to spur additional sugar production, as contracts beginning in October 2017 and beyond are trading below 20 cents, a potentially bullish signal for future production.
Mr. McDougall also pointed to sugar futures in China, which have fallen 2.1% compared to 8.9% in the New York contract at a time when the yuan has been strengthening, which would normally accelerated a fall. He said the price disconnect between New York and China should help support Chinese imports.
In other markets,cocoa for December was up 0.5% at $2,709 a ton, arabica coffee for December was up 0.9% to end at at $1.629 a pound, frozen concentrated orange juice edged higher, up 1% to end at $2.2585 a pound, a fresh all-time high, and cotton edged up 0.6% to settle at 68.60 cents a pound.
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(END) Dow Jones Newswires
November 02, 2016 16:38 ET (20:38 GMT)
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