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Sugar Falls as Credit Concerns Erode Demand; Orange Juice Rises
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By Yi Tian and Catarina Saraiva

Dec. 9 (Bloomberg) -- Sugar futures fell for a fourth day after Standard & Poor’s downgraded Spain’s credit outlook, raising concerns that the economic recovery may be slower, dimming the outlook for demand. Orange juice gained.

The Reuters/Jefferies CRB Index of 19 raw materials sank as much as 1.5 percent after S&P cited a “prolonged period of economic weakness” ahead for Spain. Standard & Poor’s shifted its outlook for the nation’s bonds to “negative” from “stable” a day after Fitch Ratings downgraded Greece’s debt.

“Any information that’s presented that relates to overall economic health for any county is going to have some impact,” said Nicole Thomas, a commodity analyst for McKeany-Flavell Co., a consulting company and brokerage in Oakland, California. “We may just be testing some of our support levels at this moment.”

Raw-sugar futures for March delivery fell 0.07 cent, or 0.3 percent, to 22.15 cents a pound on ICE Futures U.S. in New York after earlier gaining as much as 1.9 percent. A 4.2 percent drop in the four sessions since Dec. 3 has trimmed the most-active contract’s gain this year to 88 percent.

Sugar has advanced as adverse weather hindered cane harvests this year in Brazil and India, the second-biggest producer and largest consumer of the sweetener. Brazil is the world’s biggest provider of the commodity.

Heavy rain in the Brazilian state of Sao Paulo yesterday led more mills to stop processing sugar cane, Michael McDougall, a Newedge USA LLC senior vice president in New York, said today in a report.

Brazil Crop

Output in the Center South region, which accounts for about 90 percent of Brazil’s sugar production, will be 28.9 million metric tons this year, down from a Nov. 16 projection of 29.3 million tons, according to Ricardo Nogueira, an analyst at broker FCStone Group Inc. in Kansas City. He said excess rainfall has cut yield.

In another ICE market, orange-juice futures for January delivery rose 1.25 cents, or 1 percent, to $1.265 a pound. The most-active contract has climbed 86 percent this year, partly on forecasts for a smaller orange crop in Florida, the world’s largest producer of the fruit after Brazil.

To contact the reporters on this story: Yi Tian in New York at [e-mail]. Catarina Saraiva in New York at [e-mail].
Last Updated: December 9, 2009 16:44 EST