By Julie Wernau 
 

Raw sugar prices broke below 11 cents a pound for the first time in six-and-a-half years Monday as the Brazilian real continued its slide against the dollar.

Brazil is the biggest producer of the sweetener in the world, and when the real weakens against the dollar, the favorable exchange rate makes sales of dollar-denominated sugar more valuable in reais terms. The Brazilian real has dropped 10% in a month as investors grow increasingly concerned about the stability of Brazil's economy amid a political corruption scandal there.

Raw sugar for October delivery fell as low as 10.92 cents a pound on the ICE Futures U.S. exchange and was recently down 1.3% to 11 cents a pound, the lowest since Dec. 26, 2008.

"The futures sugar market in New York behaves like an endless rerun of a horror movie," Arnaldo Luiz Correa, director at Archer Consulting in Santos, Brazil, said in a note.

Mr. Correa said that over the last 20 session, the devaluation of the real has accounted for 60% of the fall in sugar prices, but he said the value of the commodity in reais per ton is less volatile. He said the contract could trade as low as 9.5 cents per pound, the lowest in seven years.

Sugar attempted a rally last week, reaching 11.64 cents a pound on Thursday, but failed and closed lower on the week. El Nino weather fears in major growing regions have been largely discounted at this point, as dry weather in Brazil is helping harvests and there are no longer fears of a "failed" monsoon in major sugarcane growing regions in Asia, Robin Shaw, analyst at Marex Spectron, said in a report.

"The dry weather in center-south Brazil and the prospect of five millions tons of sugar being dumped out of the region every month during this peak period of the crop, coupled with the continuing weakness of the Real, did not give a rally much of a chance," Mr. Shaw said.

In other markets, cocoa for September delivery fell 0.6% to $3,191 a ton. The contract has met resistance in its attempts to break higher at a time when money managers are heavily betting on higher prices, making it vulnerable to a sell off, the Hightower Report said. Traders are awaiting news on port arrivals in Ivory Coast to see if dry weather in the world's largest cocoa growing region has impacted crops there. Showers will continue to be below normal in prime cocoa growing regions in West Africa over the next 10 to 30 days, according to WeatherBELL Analytics in New York.

Cotton for December delivery fell 1.1% to 63.48 cents a pound, headed toward its lowest close since June 15, on concerns about lower demand from China--the world's largest cotton importer--along with positive growing conditions in India, which by some estimates is posed to outpace China as the world's largest cotton producer.

September frozen concentrated orange juice futures jumped 2% to $1.2605 a pound, and arabica coffee for September delivery fell 1% to $1.2405 a pound.

Write to Julie Wernau at julie.wernau@wsj.com

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