FX.co ★ Sugar Futures at Over 1-Week Low

US sugar futures traded near 14.8 US cents per pound, the lowest level in a week, as weaker oil prices reduced the incentive to divert sugarcane to ethanol production, brightening the outlook for global sugar supplies. At the same time, an improving monsoon in India has reinforced expectations for stronger sugar output. The world’s second-largest sugar producer moved into a rainfall surplus in early July, with additional precipitation forecast through mid-July.

Earlier this month, prices had climbed to 15 US cents per pound, the highest since mid-May, amid concerns about El Niño. The weather pattern typically brings drier conditions to much of the Asia-Pacific region and heavier rainfall to parts of the Americas, posing risks to crops in major producing countries such as India and Brazil. Recent data also showed that sugar production in Brazil’s key Center-South region fell about 3% year-on-year to 2.31 million tons in the first half of June.