Jan. 8 (Bloomberg) -- Sugar futures declined in New York to the lowest since July 2010 on signs that an improving global production outlook will add to a supply glut.
The 2014 cane harvest in Australia, the world’s third- biggest sugar exporter, may exceed 32 million metric tons, compared with about 30.5 million a year earlier, producers’ group Canegrowers said today. In Brazil, the largest producer, rains this week will boost the crop, Somar Meteorologia said yesterday.
Prices slumped 16 percent in 2013, the third straight drop and the longest decline since 1992. Global production will exceed consumption for a fourth straight year, pushing inventories to a record 43.38 million tons in the season that ends by September for most countries, according to the U.S. Department of Agriculture. Krispy Kreme Doughnuts Inc. locked in lower costs by making forward purchases, Chief Executive Officer James H. Morgan said in September.
“There’s more supply coming in the world market,” Alex Oliveira, a trader at Newedge USA LLC, said in a telephone interview from New York. “It looks like demand is being very slow, at least at the beginning of the year. It’s hard to get confident that the market is going to be trading higher.”
Raw sugar for March delivery slid 2 percent to settle at 15.74 cents a pound at 2 p.m. on ICE Futures U.S. in New York, after falling to 15.69 cents, the lowest for a most-active contract since July 1, 2010.
Production this season will be 7.19 million tons higher than demand, after a surplus of 12.36 million tons a year earlier, the USDA said Nov. 21. In the week ended Dec. 31, U.S. money managers increased their net-bearish bets by 8.8 percent to 25,626 contracts, the most since September, government data show.
Production in Thailand, the largest exporter behind Brazil, jumped 67 percent to 2.38 million tons in the first 42 days of the season, from a year earlier, data from the Office of Cane and Sugar Board show.
More supplies may come from India as mills are under pressure to export the sweetener to pay cane arrears, Nick Penney, the co-head of the softs department at Sucden Financial Ltd. in London, wrote in a report today.
Refined-sugar futures for March delivery fell 1.6 percent to $432.30 a ton (19.61 cents a pound) on NYSE Liffe in London. Prices dropped 14 percent in 2013, a third consecutive loss.
--Editors: Millie Munshi, Patrick McKiernan