Hedge Funds Hedge Bets on Sugar as Drought Threatens Supply

June 23, 2014 James Heinsman In the News

As major sugar producers around the world face drought, hedge fund managers are betting on increased sugar prices by raising their net-long positions on this crucial commodity.

Hedge funds were bullish on sugar in anticipation of prices climbing to their highest point since last October due to the lack of rain from Brazil to India.

Continued dry weather in Brazil is only adding to the already bad yields from drought conditions during the first quarter of 2014, according Sao Paula researcher Job Economia & Planejamento.

In India, the second biggest producer of sugar after Brazil, the prospect of reduced rainfall is also putting sugar crops at risk for damage. Bruno Lima, a senior risk-management consultant at FCStone do Brasil, is expecting that global production will not be able to meet demand in the year ending on September 30, with things only getting worse next season.

“The drought in Brazil will probably have some impact,” said Peter Sorrentino, who helps manage $3.8 billion at Huntington Asset Advisors in Cincinnati. “We’ll see pretty decent agricultural price movement through the balance of the year, just because of weather-related issues.”

Brazil, Bruno Lima, drought, FCStone do Brasil, Huntington Asset Advisors,

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