October NY world sugar #11 (SBV26) on Wednesday closed down -0.14 (-0.94%), and October London ICE white sugar #5 (SWV26) closed down -4.60 (-0.98%).
Sugar prices settled lower on Wednesday as India’s monsoon rains continue to improve. India’s Meteorological Department reported on Wednesday that India’s cumulative monsoon rainfall was 19% below normal as of July 22, a substantial improvement from 42% below normal on June 30.
Sugar losses were limited on Wednesday amid strength in crude oil prices. WTI crude oil (CLQ26) rose more than +2% to a 6-week high on Wednesday, boosting ethanol prices and potentially persuading sugar mills worldwide to divert more cane crushing toward ethanol production rather than sugar, thus curbing sugar supplies.
An excessively long position in London ICE sugar by funds can exacerbate any price downturn. Last Friday’s weekly Commitment of Traders (COT) data showed funds boosted their long positions in ICE London white sugar by +716 in the week ended July 14 to a record 58,847 net-long positions (data from 2011).
Sugar prices have rallied sharply over the past month, with NY sugar reaching a 2.25-month nearest-futures high on July 8 and London sugar posting a 10.5-month high on July 7. Sugar prices have climbed amid concerns that weak monsoon rains in India will lower sugar yields and reduce the country’s sugarcane harvest, the world’s second largest. India’s Earth Science Ministry warns that this year’s monsoon in India could be the weakest in 11 years. India’s monsoon season runs from June through September.
