LONDON, April 19: Sugar futures slumped to a 16-month low on Thursday while copper and gold were hit by worries about Chinese growth and oil rose on Iranian tension.
Speculators in the sugar market sold on fears a production glut will drive down prices, though some of the slide was triggered by technical pressure points, fund managers said.
Everybody has been talking about the surplus for months, so
I cannot believe this is not already incorporated in the price, a Swiss-based fund manager said.
This part of the downtrend is mainly technical.
Sugar, with losses of 6 percent since the start of the year, has underperformed the broader commodities markets dramatically.
Brent crude oil was up 7 per cent, gold up 6 per cent and industrial metal copper up 20 per cent.
While forecasts of strong demand and limited supply have underpinned other markets and kept speculators interested, the outlook for sugar is one of oversupply.
London sugar futures were quoted at $311.00 per ton at 1248 GMT, down $1.50 from Wednesday's closing price and just above their 16-month low of $310.60. Influential merchant Czarnikow forecast a record Brazilian cane crop of 420 million tons in 2007/08, up 13.2 per cent from the preceding year, and India is also seen harvesting a bumper crop. Overall, analysts see the market in surplus by around 8.5 million tons.
Gold and industrial metals were knocked by worries about Chinese economic growth.
Chinese stocks plunged more than 4 per cent on fears that inflation data would prompt the central bank to raise interest rates, a concern that spilled over into other markets.
This spread over to other Asian and also the European stock market. Unwinding of yen carry trades and increased investor risk perception is back on the agenda, Dresdner Kleinwort analysts said.
Gold is a risky asset and is under pressure.
Gold was quoted at 684.30/685.10 at 1249 GMT, around $6 below the 11-month high it hit earlier in the sesson.
Copper futures at the London Metal Exchange, seen as a gauge of economic growth, were quoted at $7,885/7,900 per ton, down slightly from Wednesday's closing price.
The downward move was mirrored by mining stocks Rio Tinto,
BHP Billiton and Anglo American, which all fell slightly.
Brent crude oil rose 43 cents to $66.47 per barrel by 1249 GMT as renewed concern over Iran's nuclear programme supported prices after falls earlier in the week.—Reuters
