Soft futures mixed; Sugar lower for second consecutive day
Investing.com – U.S. soft futures were mixed on Wednesday, with front-month sugar prices declining for the second consecutive day as a short-covering rally which took prices to an almost four-week high earlier in the week ebbed.
On the ICE Futures U.S. Exchange, sugar futures for July delivery traded at USD0.1666 a pound, down 0.45% on the day.
The July contract held in a range between USD0.1664 a pound, the daily low and a session high of USD0.1676 a pound.
Sugar prices rose to USD0.1697 a pound on Monday, the highest level since May 28, as hedge funds and large institutional investors covered short positions, or bets that prices will fall, a move known as short covering.
Sugar prices fell to a three-year low of USD0.1617 a pound last week, as farmers in Brazil started to accelerate harvesting of the nation’s sugar crops.
Brazil is the world’s largest sugar producer and exporter, with the U.S. Department of Agriculture estimating the nation accounts for nearly 20% of global production and 39% of global sugar exports.
Meanwhile, Arabica coffee for September delivery traded at USD1.2405 a pound, down 0.2% on the day. The September contract held in a range between USD1.2343 a pound, the daily low and a session high of USD1.2413 a pound.
Coffee prices plunged to a three-year low of USD1.2117 a pound on June 12, as concerns over ample global supplies drove prices lower.
The coffee market has been under heavy selling pressure in recent weeks as traders eyed a huge harvest in top grower Brazil.
Some technical selling also weighed after prices broke below key support levels, triggering a flurry of automatic sell orders amid bearish chart signals.
Elsewhere, cotton futures for December delivery traded at USD0.8721 a pound, down 0.1% on the day. The December contract fell by as much as 0.7% earlier in the session to hit a daily low of USD0.8676 a pound, the weakest level since June 11.
Cotton prices have been subject to heavy profit-taking after front-month prices rose to a three-month high of USD0.9257 a pound on June 14.
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