Sugar price records strongest daily fall in 20 months

The price of raw sugar traded in New York dropped more than 5% yesterday and closed at 14.64 US cents per pound. This was also its biggest daily loss in 20 months. The sharp downswing was sparked by automatic sell orders and sell-offs on the part of institutional investors. This is also reflected in the trading volume of the front-month raw sugar future contract, which saw 7% of the day's volume traded in the space of just 60 seconds. 

Therefore, raw sugar shed the gains it had made in the last two days of trading and was unable to maintain the nine-month high it achieved on Tuesday. The previous price rise had been driven by fears that the El Niño weather phenomenon could have a negative impact on the crops in India, Thailand and China. Due to heavy rainfall in the key growing areas of Brazil, the crop harvesting is getting delayed and adversely affecting yield. Most market participants currently envisage a global supply deficit for the 2015/16 crop, says Commerzbank.