Sugar tumbles to 7-week low on ample supplies, EU debt woes

Forexpros – Sugar futures continued their recent run of losses on Thursday, dropping to the lowest level since late-September as rising sugar production in Russia and Ukraine added to the view that global supplies are ample.

On the ICE Futures U.S. Exchange, sugar futures for March delivery traded at USD0.2423 a pound during European afternoon trade, dropping 0.98%.

It earlier fell by as much as 1.1% to trade at USD0.2420 a pound, the lowest since September 26.

Sugar prices have lost nearly 8% since the beginning of November, as increasing competition for U.S. exports pushed prices lower.

Russia’s First Deputy Prime Minister Viktor Zubkov, who is responsible for the country's agricultural sector, said earlier that the country’s sugar harvest may more than double to a record high of 48 million metric tons in the 2011-12 marketing season.

Russia harvested approximately 19.9 million tons in the previous marketing year.

The Moscow-based Institute for Agricultural Market Studies estimated the country’s sugar export capacity at 250,000 tons in the 2011-12 season that started August 1.

Meanwhile, Belarus’s Ministry of Agriculture and Food said Wednesday that the country’s sugar beet harvest rose to 4.5 million metric tons this year, up 17% from a year earlier.

Belarus is expected to produce nearly 580,000 to 590,000 tons of sugar this year. About 220,000 to 280,000 tons of it will be exported, according to Mikhail Rusy, the country’s minister of agriculture and food.

Sugar prices came under further pressure after Ukraine’s Agrarian Minister Mykola Prysiazhniuk said earlier that he was holding talks with countries in the European Union on sugar exports, though he did not specify the volume of possible quotas.

The U.S. Department of Agriculture estimated last week that Ukraine’s sugar exports will rise to 217,000 tons in the 2011-12 marketing season, more than doubling the 109,000 tons exported last year.

Meanwhile, commodity traders continued to eye developments surrounding the euro zone’s sovereign debt crisis after Spanish borrowing costs spiked to a euro-era high at a Treasury bill auction, while French borrowing costs also rose, fanning fears over contagion to core euro zone economies.
 
Elsewhere on the ICE Futures Exchange, cotton futures for December delivery edged 0.3% higher to trade at USD1.0381 a pound, while Arabica coffee for March delivery shed 0.53% to trade at USD2.3760 a pound.