Sugar futures traded on the New York Mercantile Exchange plunged over 9 percent on Thursday.
The fundamental reason is that the tropical storm Cyclone Yasi, which struck Queensland, Australia, did not disrupt the country's sugar production as much as initially feared. Australia is the third largest sugar exporter in the world.
There was 5.7-million tonnes of cane still left unharvested, that majority of which was in the regions of Burdekin and Central, which appears to have escaped any major cyclone damage, said the Australia & New Zealand Bank, reported Agrimoney.
However, a whopping 9 percent decline is astounding and possibly points to the triggering of automatic sell orders or a trading error, according Jake Wetherall at Rabobank, reported Agrimoney.
Cyclone Yasi was first identified on January 26, 2011. On that day, sugar futures closed at $33.11. Over the next few days, it climbed as high has $36.08, gaining about 9 percent.
February 3rd's drop, however, takes it all the way down to $32.12, so relief over fears of production disruption in Australia can't entirely account for the gigantic one-day loss.