(Bloomberg) -- Raw sugar futures headed for the biggest weekly drop in more than a month as investors are seen increasing their short positions on bets for large supplies.

Money managers are expected to have reached a net short position of as much as 70,000 lots, according to estimates from Michael McDougall, managing director at Paragon Global Markets. That would be the largest short position since 2020, he said. Commitment of Traders data will be released later Friday. 

The most-active contract is down for a third straight session, heading for a 6% weekly drop, with prices nearing an 18-month low. 

The rise in bearish bets is supported by a strong start to the sugar cane crushing season in top exporter Brazil. A “tremendous” shift to sugar in Brazil at the expense of ethanol means results for the season could be “much much more than the most optimistic expectations”, said Claudiu Covrig, lead analyst at Covrig Analytics.

The recent price dip made the commodity attractive for buyers, including major importer China, Covrig said. That is helping to provide some floor to prices, as he believes China “massively” bought at times when prices neared the 18 cents level.

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