If you binged on sugar last year, you are probably feeling sick.
Raw sugar futures have fallen for 12 straight weeks, the longest run since data on the contract begins in 1961.
While prices are about the same level as a year ago, it has been a huge swing up and down.
The reasons are that a surplus is hitting the market and speculation that India, the world’s top consumer, would need to import the sweetener is not materializing.
It is a lesson in commodity-market volatility.
Last year, sugar was the best-performing raw material as forecasts for a deficit lured in speculators and hedge funds. This year, it is the reverse. Traders are exiting bullish bets and prices are down 20 percent, more than anything else in the Bloomberg Commodity Index.
“When you see a market inflating like a balloon, then, of course, what’s going up is also going down,” Platts Kingsman senior sugar analyst Claudiu Covrig said by telephone. “I was expecting this low, but how low can we go next?”
Raw sugar for July delivery fell 5.3 percent this week on ICE Futures US in New York.
On Friday, prices rose 1.6 percent to US$0.1567 per pound.
Speculators have been pulling out of the market and the net-bullish position is down from a record in September last year, according to data from the US Commodity Futures Trade Commission.
“Funds have an important capacity to move the market and this is what happened in the past two, three years,” Covrig said. “They are looking forward — and forward, we see a year of surplus.”
Output is poised to exceed demand by 3.14 million tonnes in the 2017-2018 season, according to Platts Kingsman.
Sugar quotas in the EU would also end later this year and producers are getting ready to unleash more supply even as consumption growth slows.
Prospects for extra imports from India are dwindling as Uttar Pradesh expects record output and lower domestic sales, according to Rabobank International.
Technical signals and poor sentiment also contributed to selling by funds this week, according to ADM Investor Services International.
Gold for June delivery advanced 0.28 percent to US$1,269.40, down 1.12 percent from last week’s US$1,283.80. The metal rose 1.5 percent this month.
Nickel on Friday led a rally in industrial metals, rising 1.9 percent to US$9,510 per tonne.
Zinc gained 1.6 percent as workers at a Peru smelter called a strike.
In London, the white sugar contract rose 1 percent to US$450.80 per tonne, down 4.3 percent this week.
Cocoa rose 0.2 percent to US$1,872 per tonne in New York.
Arabica coffee was little changed at US$1.296 per pound and robusta coffee gained 0.5 percent to US$1,919 per tonne.
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