Those once white-hot commodities were dumped at a startling pace.
The selloff swept across the board, with sugar being the biggest loser. After tumbling 11.3% on Friday, sugars loss for the last two days was compounded to more than 20%. Elsewhere, grains corn, wheat and soybeans all fell more than 5%, with energy and precious metals posting relatively modest losses. Lean hogs and orange juice were the best performers: down 0.3% and 0.6%, respectively.
There are a lot of small players in these markets, said Kurt Kinker, chief market analyst at Mirus Futures, a commodities broker in Chicago. Its no longer about supply and demand. Its more trading for tradings sake, he said.
Sugar, although a relatively niche market, is viewed as a trend-leading commodity, he said. Many traders are watching it to gauge where the commodity markets are moving.
The real test will come next week. If these moves are carried through, there will be more downside.
In the sugar market, there is a standoff between producers and consumers, with both sides hesitant to commit at current prices, said Marcos Nogueira, a sugar broker at FCStone Group in Brazil. Producers are still in the process of recovering themselves, while consumers are bidding prices lower and lower, he said. The selling force mainly came from trading houses, who were long sugar but didnt actually want the physical sweet stuff.