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Sugar Falls as Recession Drives Commodities to Six Year Low
Dec 04,2008 00:00
by
saroja
Sugar prices fell as commodities slumped to the lowest in six years on signs the global recession is deepening, eroding demand for raw materials. Coffee also dropped. The Reuters/Jefferies CRB Index, which includes prices of crops, metals and energy, dropped to the lowest level since November 2002. Before rebounding, U.S. equities fell as much as 2.2 percent, triggered by declines in commodity producers. The dollar rose against a basket of six major currencies, eroding the appeal of U.S. goods. “The dollar strength and equity weakness are weighing on a lot of commodity markets,” said Dan Vaught, an analyst at Wachovia Securities LLC in St. Louis. Raw-sugar futures for March delivery fell 0.46 cent, or 4 percent, to 11.16 cents a pound on ICE Futures U.S. in New York. Earlier, the price touched 11.13 cents, the lowest for a most- active contract since Oct. 28. The CRB index has tumbled more than 50 percent from a record in July, led by plunging crude-oil costs. Oil is down more than $100 a barrel from a record in July. “Sugar is suffering from the consequences of being so closely linked to energy prices,” Vaught said. Lower fuel prices may cut demand for ethanol made from sugar cane, he said. Arabica-coffee futures for March delivery fell 0.65 cent, or 0.6 percent, to $1.1125 a pound on ICE. The price has dropped 18 percent this year, while the CRB index has tumbled 37 percent. Cocoa futures for March delivery rose $13, or 0.6 percent, to $2,183 a metric ton. The price has climbed 7.3 percent this year. Among CRB components, only hogs, cocoa and sugar have posted gains in 2008. Orange-juice futures for March delivery gained 1.1 cents, or 1.4 percent, to 77.45 cents a pound. Still, the price is down 47 percent this year. http://www.bloomberg.com/apps/news?pid=20601081&sid=ah4U |