SOFTS-Sugar hits 3-1/2 year low on US economic contraction, fading supply fears

LONDON, May 1 (Reuters) - Sugar futures traded on the ICE exchange hit a 3-1/2-year low on Thursday following data showing a contraction in the U.S. economy, the world's largest, and fading supply fears.

May Day public holidays around the world, including much of Europe, meant trading was thin.

"The main negative is the U.S. dragging the world into a global recession with its tariff wars," said New York-based sugar broker Michael McDougall.

Raw sugar SBc1 was down 0.3% to 17.20 cents per lb at 1600 GMT, having hit its lowest since July 2021 at 17.08 cents, while white sugar LSUc1 was up 0.3% to $494.20 a ton.

Data on Wednesday showed the U.S. economy contracted for the first time in three years in the first quarter, swamped by a flood of imports as businesses raced to avoid higher costs from trade tariffs.

U.S. President Donald Trump's tariffs have made it probable that the global economy will slip into recession this year, a Reuters poll suggested.

Elsewhere, deliveries of raw sugar on the expiry of the May contract SBK5 on ICE totalled 1.48 million metric tons, according to the official delivery report released by the exchange. Although sizeable, the delivery was below last year's number for the May contract.

Overall, though, worries over sugar supply prospects are fading. Top producer Brazil's sugar output in the key centre-south region is seen up 3.7% year-on-year at 41.8 million metric tons in the current 2025/26 season, state agency Conab said.

In other soft commodities traded, New York cocoa CCc2 ​​​​was down 1.8% at $8,729 a metric ton, having hit a 1-1/2 week low on Wednesday, while London cocoa LCCc2 fell 1.5% to 6,368 per ton.

Arabica coffee KCc2 slid 4.1% to $3.8450 per lb, having set a 2-1/2-month high of $4.1890 on Tuesday, while robusta coffee LRCc2 sank 4.3% to $5,140 a ton.