(Bloomberg) -- Raw sugar futures erased earlier gains as traders continue to weigh the impact from recent fires and dry weather in Brazil, the world’s top grower and exporter, against a favorable outlook for other large producers in Asia.
The most-active contract climbed as much as 1.7% in New York before ending the day slightly lower.
Citigroup analysts led by Aakash Doshi said in a Thursday report: “We take profit on our long October ICE sugar position” as the contract approaches expiration, which happens later this month.
Futures have climbed about 9% since the first reports of fire outbreaks in Brazil in late August. Money managers are likely reacting to the uncertainty on Brazilian crops while still keeping a net-short position, Bruno Lima, head of sugar and ethanol at StoneX, said in a note.
“It’s true that recent events don’t make investors comfortable with increasing sales, but they don’t seem to support unbridled buying either,” Lima added.
While trading companies and consultancy groups have recently cut the outlook for the Brazilian supply, the latest forecasts also account for improving conditions for sugar cane crops in top Asian producers India and Thailand. It’s still unclear if India will allow any sugar exports as the country recently lifted restrictions on sugar mills and distilleries using cane juice to make ethanol.
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