cocoa options

cocoa options

December 13, 2016

Raw sugar futures fell into bear market territory Tuesday as traders exiting long positions largely looked past a boost to gasoline prices in Brazil.

Raw sugar for March delivery dropped 3.4% to end at 18.60 cents a pound on the ICE Futures U.S. exchange, the lowest close for the most active contract since June 2.

The sugar market is still heavily long, with the bulls outweighing the bears by 174,459 contracts as of last Tuesday, according to U.S. Commodity Futures Trading Commission data. At the close, the market was down 22% from its most recent high reached Oct. 5, pushing it into bear market territory.

Petroleo Brasileiro SA, or Petrobras, announced an increase in the price of gasoline by 8.1%, and 10.5% for diesel. When ethanol prices rise it encourages producers to convert a larger percentage of cane to ethanol. Marex Spectron said in a note that the price increase is likely to push up ethanol prices in Brazil by about one cent.

With higher prices this year than last year in the sugar market, about 46.8% of cane has been converted to sugar rather than ethanol versus 40.9% in the world’s largest producer of sweetener. The firm said if producers in Brazil decide next year to convert anything less than the maximum amount of cane to sugar, it could be a “game changer” for the market.

Meanwhile, both Rabobank and Sucden Financial pointed to the possibility that supply of sugar could exceed demand next season.

Growing conditions have been favorable in the world’s major growing regions, says MDA Weather Services, as a strong El Nino year has given way to a weak La Nina.

In other markets, cocoa for March rose 2.2% to $2,289 a ton, arabica coffee for March was up 0.6% to end at $1.4285 a pound, frozen concentrated orange juice futures for January lost 1.1% to end at $2.022 a pound and March cotton was up 0.5% to settle at 72.04 cents a pound.

- Julie Wernau at Wall St. Journal.