Sugar soared ahead of index funds' portfolio rebalancing

Source: Dukascopy Bank SA
© Scanpix/Reuters
Farm commodities apart from sugar were bearish on Thursday amid broadly stronger US Dollar and weak risk appetite among investors. Profit-taking and light trade volumes also created heavy selling pressure on the commodity sector.

Wheat dived to five-month low on signs of vanishing demand for US supplies. US exports for delivery in 12 months that started June 1, were off 13% year on year, according to USDA. Year-end rebalancing also appears to be less supportive for wheat that gained 18% this year.

Corn slumped as crops in Argentine were unaffected by deteriorated weather in the country. Moreover, weak demand for US corn and year-end sell-off by index funds pushed corn prices down.

Sugar was the only gainer as dry weather in the north east Brazil threatened sugar crops. The sweetener also moved higher on signs that index funds are preparing for rebalancing that takes place in January.

Coffee edged lower amid ample global supplies. However, the commodity was the top laggard in 2012, plunging almost 38% year on year. Hence, coffee may witness strong demand from index funds next month.


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