Indiana Grain Company, LLC

Posted: 09/18/11

By: tomgrisafi

Sugar may be a sweet but volatile trade this week following last week's unwinding of the commodity.

Sugar prices plunged 6.7 percent Friday on expectations that Brazil's production may be bigger than expected this year.

As highlighted over the weekend by Bloomberg, a Brazilian sugarcane trade group said production increased in the last two weeks of August. That eased concerns the crop may have been affected by bad weather or other problems. Brazil is the top global producer of sugar.

Spencer Patton, founder and chief investment officer for hedge fund Steel Vine Investments LLC, said he does not expect lower prices for sugar futures on commodities markets to be passed along to "consumers for some time."

"Until they start taking the sugar packets off the table when you go to the restaurant, it's still a relatively cheap commodity," he said.

Sugar for September delivery fell 1.98 cents to end at 27.52 cents per pound.

Although the price has fallen 14 percent this year, it remains 12 percent higher over last year at this time.

Source: Bloomberg

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