Sugar Futures Drop in New York as Stocks Slump, Crude Oil Falls

By Shruti Date Singh

Nov. 20 (Bloomberg) -- Sugar prices fell in New York on concern the drop in the Dow Jones Industrial Average will reduce demand for commodities and crude oil's plunge may curb purchases of ethanol made from cane.

The Dow fell to the lowest level since March 2003 today amid concern that a global recession will be prolonged. Crude oil fell below $49 for the first time since May 2005.

``It's basically a little bit of spillover selling based on energy and equities,'' said Bill Adams, managing director for JKV Global in Chicago. ``Sugar should continue to fall until the first quarter.''

Raw-sugar futures for March delivery fell 0.16 cent, or 1.4 percent, to 11.51 cents a pound on ICE Futures U.S. in New York. The price has fallen 4.2 percent this month as crude oil slid 28 percent.

Morgan Stanley yesterday cut its sugar-futures forecast for the current and next marketing years on ``markedly lower crude- oil prices in the near term.''

Sugar will average 12.5 cents a pound on ICE in the year ending Sept. 30, down from an April forecast of 13.3 cents, Morgan Stanley said. The price will average 14 cents in the 12 months ending in September 2010, down from 16.2 cents projected earlier, the bank said.

Supply deficits may boost prices to 19 cents in the year ending in September 2011, the bank said.

To contact the reporter on this story: Shruti Date Singh in Chicago at ssingh28@bloomberg.net.