The US Soft commodity futures gave a mixed performance on Wednesday as the Sugar prices plunged. Sugar prices are currently trading near their three year lows with the backdrop of sugar crops’ harvest data from Brazil.

On Wednesday, the Sugar commodity futures for October delivery in the ICE futures US Exchange dipped by 0.25% to trade at $0.1631 a pound of sugar. The October delivery further reached a session low of $0.1625 a pound. Previously, on June 13, the Sugar Futures contract had touched a three-year low of $0.1617 a pound.

Later, on Thursday, the ICE Futures Exchange Raw Sugar Futures contracts further decline by 0.6% to trade at $0.1625 per pound. Again, the prices plummeted through key technical support points as it reached a low of $0.1619 per pound. This is the lowest for front-month Sugar Futures since it reached a previous low of $0.1602 per pound on June 28.

Meanwhile, in line with this trend the Cocoa Futures on the ICE Exchange dipped by 0.4% to trade at $2,178 a tonne. The LIFFE Cocoa September delivery too dropped by 0.7% to trade at 1,516 pounds a tonne. This decline in prices was underpinned by the easing of bad weather concerns in East Africa, which previously had driven up the prices.

Brazil is currently the World’s biggest Sugar producing country that has big share in the global sugar exports. According to the U.S. Department of Agriculture, Brazil accounts for almost 20% of global sugar production and a 39% of the global sugar exports. As these numbers point out, any change in the agriculture and harvesting patterns of Sugar in Brazil is bound to have a profound impact on the ICE US Futures exchange prices for Sugar.

Last week, a leading Brazilian industry group Datagro reported that Brazil’s main sugar crops cultivating region is poised to produce 35.3 million metric tons of sugar in the current season. This is a clearly more than 34.1 million tons of sugar that was produced last season. This speculation of a possible increase in the sugar harvest dragged down the Sugar future prices in the ICE US Futures exchange.

Previously, the traders were expecting a fall in the sugar supply as they predicted a drop in the Sugar production from Brazilian Mills. According to the Unica industrial reports, the Brazilian center-south sugar mills had produced only 1.5 million tonnes of sugar, in the second half of June. This when compared to the 1.78 million tonnes of sugar produced in the first half of June signaled a clear decline in sugar production.

This decline was due to the rains that had delayed the cane crush process. As a result traders had previously speculated a decline in Sugar supply. But, the last week’s reports from Brazilian industry group Datagro has thwarted the traders’ expectations creating a speculation for rise in sugar harvests.

However, the climatic reports suggest that the La Nina condition maybe setting in. This will create a hot and dry weather conditions affecting many commodity crops. One has to wait and watch as this weather condition develops and see how it affects the crop production and the prices of commodities like sugar.