Jan. 15 (Bloomberg) -- Raw-sugar futures tumbled to the lowest since June 2010 as India, the world’s second-largest producer, plans to consider incentives tomorrow to boost production for exports.
Subsidies cleared by a panel of ministers will need approval by the Indian cabinet. Global inventories will rise to a record as consumption trails production in the marketing period ending in 2014 for most countries, the U.S. Department of Agriculture forecast in November.
Futures have fallen 7.2 percent in 2014 after last year’s 16 percent drop capped the third straight decline and the longest slump since 1992. Money managers grew more bearish in the week ended Jan. 7, boosting wagers on a drop by 47 percent to 37,758 futures and options contracts, compared with net-longs of 25,117 a month earlier, government data show.
India is “trying to get rid of sugar, and the world market seems to be indicating it doesn’t want it or need it,” Michael McDougall, a senior vice president at Newedge Group in New York, said in a telephone interview. “There’s technical momentum selling.”
Raw sugar for March delivery fell 1.7 percent to settle at 15.23 cents a pound at 2 p.m. on ICE Futures U.S. in New York, the biggest drop for a most-active contract since Jan. 8. Earlier, the commodity touched 15.13 cents, the lowest since June 29, 2010.
The slump may trim costs for buyers including Krispy Kreme Doughnuts Inc. In September, the company said it locked in lower costs by making forward purchases.
“The market is still preoccupied about the large supply overhang,” Jack Scoville, a vice president at Price Futures Group in Chicago, said in a report. “Confirmed big deals have been almost impossible to find.”
Mills in Brazil’s Center South, the nation’s main producing region, processed a record amount of cane this season, Unica, a Sao Paulo-based industry group, said yesterday.
“The numbers were greeted as bearish,” Nick Penney, a senior trader at Sucden Financial in London, said in a report.
Brazil is the top grower and exporter.
--With assistance from Pratik Parija in New Delhi. Editors: Patrick McKiernan, Millie Munshi