Sugar prices shot to four-year highs after a frost in Brazil cut the size of the cane crop in the world’s biggest producer, and hedge funds are adding to the market’s momentum.
Prices for raw sugar futures have jumped 10% over the past month to trade at about 20 cents a pound in New York. Sugar prices haven’t been that high since early 2017 and have climbed more than 60% over the past year.
A cold snap in Brazil sparked the rally. Severe frosts struck areas of the sugar-producing Center-South region including Paraná, São Paulo and Minas Gerais in June and July. The unusual chill damaged the cane, stunted its growth and reduced its sugar content. That prompted farmers to reorganize their harvest times and diminished a crop that had already dwindled due to a prolonged drought.
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