By Julie Wernau
Sugar prices erased their gains on Thursday after hitting a
near-six-week high in early trade, as investors locked in
profits.
Raw sugar for October rose to 12.68 cents a pound, the highest
intraday price since May 21, after a large company took delivery
against the July contract and dented expectations of a global
surplus. But the October futures, the most actively traded raw
sugar contract on the ICE Futures U.S. exchange, ended down 1.1% at
12.30 cents a pound.
Traders thought the rally was overdone and chose to take
profits, said Michael McDougall, head of the Brazil desk at Société
Générale in New York. Prices rose as much as 6.1% from Friday's
close to Thursday's peak. Also, the holiday-shortened week
encouraged some traders to close out of their positions. The U.S.
market will be closed Friday for the Independence Day holiday.
The July contract expired Tuesday with 460,930 metric tons of
Brazilian raw sugar delivered to Wilmar International Ltd. The
Singapore agribusiness group also took delivery of 1.9 million
metric tons of sugar against the May contract, a record for the
market.
Wilmar bought the equivalent of the entire global supply surplus
predicted for the year ending Sept. 30, Commerzbank said in a note.
The International Sugar Organization estimates global production
will exceed consumption by 2.2 million metric tons this year.
Still, Agrilion Commodity Advisers said Wilmar's sugar
refineries in North Africa, India and the Far East should have no
difficulty absorbing the tonnage, and there would be plenty of
sugar left in the world.
"The bears will argue that the delivered volume was not
particularly significant and there is still a sizable prompt
surplus with a large volume of Thai [raw sugar] which still need a
home," the firm said in a note.
Bell Curve Trading in Freehold, N.J., said in a note that sugar
prices ended below a technical trading limit that could signal
further gains for the contract in the near term.
In other markets, cotton for December fell 0.2% to end at 67.39
cents a pound, reversing earlier gains that came after U.S. net
export sales rose for a third week in a row. In the week ended June
25, net sales of upland cotton, the most common variety grown in
the U.S., surged 33% from the previous week to 80,500 bales. Actual
shipments of cotton climbed 23% from the previous week to 230,400
bales.
"A lot of these foreign mills are holding off on buying just as
much as they can. Some of this might represent 'I've got to have it
tomorrow, so I've got to buy it today,'" said Sharon Johnson,
introducing broker at Wedbush Securities.
Frozen concentrated orange juice for September rose 1.3% to
$1.1815 a pound, and September arabica coffee climbed 0.3% to
$1.274 a pound.
Cocoa futures fell 1% for the week, the first such loss after
four weekly gains. The September contract ended Thursday up 0.4% at
$3,288 a ton.
Write to Julie Wernau at Julie.Wernau@wsj.com
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