Sugar futures headed for the longest decline since December as an expanding global glut signals lower costs for buyers including Nestle SA.
World output will exceed consumption by 3.8 million metric tons in the year that begins Oct. 1, Martin Cardozo, a trading manager for Bunge Latin America LLC, said at an industry event Sept. 12. That’s almost triple the forecast by the International Sugar Organization.
Futures are heading for a fourth straight annual loss, the longest slump since at least 1962, as the market heads for a fifth consecutive surplus. Plants in Brazil, the world’s top grower and exporter, proved resilient in the face of the worst drought in decades. Bumper crops in Thailand and India are adding to supplies, while the ISO expects global demand for imports to drop in the season starting next month.
“Anticipation of a large world crop and supplies are putting pressure on prices,” Boyd Cruel, a senior market analyst at Vision Financial Markets in Chicago, said in a telephone interview. “The market has also been weighed down by expectations for large deliveries” from Thailand, he said.
Raw sugar for March delivery fell 0.5 percent to 16.24 cents a pound at 10:33 a.m. on ICE Futures U.S. in New York. The contract is heading for a ninth straight loss, the longest streak since Dec. 9.
Traders in Thailand, the second-biggest exporter, plan to ship their first deliveries against New York contracts since 2012. About 625,000 tons of raw Thai sugar will probably be delivered against October futures on ICE, equal to about 16 percent of this year’s surplus, according to a Bloomberg survey of analysts and traders last month.
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