![Australian sugar cane farmers are disappointed with the recent decline in sugar values. Australian sugar cane farmers are disappointed with the recent decline in sugar values.](/images/transform/v1/crop/frm/5Q2j7ezUfQBfUJsaqK3gfB/2e0fc8db-c1ab-45fe-bde4-ec9893b303ab.jpg/r0_77_1500_924_w1200_h678_fmax.jpg)
INTERNATIONAL sugar prices have fallen to their lowest levels since mid-September, giving up all of the gains made in a month-long rally in spite of a lack of obvious supply and demand news to drive the price south.
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The flagship New York sugar futures price fell 2.5pc on Monday night for the March contract amid speculation investment funds were exiting sugar investments.
It currently sits at US22.1 cents a pound, which equates to around $A639 a tonne.
Tobin Gorey, Commonwealth Bank commodity analyst said while the fundamentals suggested there would be another price bounce, the recent price fall should be taken as a warning.
“The investor long that is the source of much of the selling is very large,” he said.
“Neither producers nor the trade, who have sold earlier, nor commercial buyers with just routine needs, will be in a hurry to buy the long off them.”
He said there had been some concern about supply for the front half of 2017 but pricing moves indicated the market was now comfortable with this.
Other commentary suggests the market is looking at a potential 2018 surplus of sugar.
In spite of this longer term, price falls for season 2017 and 2018 contracts have not fallen by as much as the immediate values, although they still remain below current prices.
The price drop comes in spite of rapidly slowing production in the Brazilian sugar cane production zone.