BLBG: Sugar Rises to Seven-Month High on Concern Supply May Fall Short of Demand
Sugar surged to a seven-month high in New York on concern that adverse weather will curb output in Brazil, the world’s biggest exporter, and Australia, the third largest.
Shipments from Australia may reach 2.9 million metric tons, below earlier expectations of as much as 3.1 million tons because of wet weather, according to Queensland Sugar Ltd., which handles more than 90 percent of the nation’s exports. Drought in Brazil is harming crops and drying the Amazon River to its lowest level in 47 years.
“Supply concerns have become an issue for the sugar market in 2010-11,” Peter de Klerk, a London-based analyst at C. Czarnikow Sugar Futures Ltd., said today by telephone. “With Brazil having shipped most of its incremental export availability, the market will be looking for other origins to fill the supply chain during the off-crop period.”
Raw sugar futures for March delivery gained 0.43 cent, or 1.8 percent, to 24.83 cents a pound at 9:51 a.m. on ICE Futures U.S. in New York. Prices touched 25.05 cents, the highest level for a most-active contract since Feb. 22.
Refined sugar for December delivery advanced 70 cents to $633.80 a ton on NYSE Liffe in London. The contract earlier reached $648.30, the highest price since March 1.
Flooding in India
Sugar-cane yields in Uttar Pradesh, India’s biggest cane producer, may be affected because of flooding, an official said last week. About 10 percent of the 2.1 million-hectare (5.2 million acres) crop area is under water, Kamram Rizvi, cane commissioner with the provincial government, said in a telephone interview.
“Concerns are being raised for other Southern Hemisphere producers, while the forthcoming Thai, Indian and Central American harvests are being delayed by wet weather,” Czarnikow’s De Klerk said.
Sugar supplies from India, the world’s second-largest producer, and Brazil remain tight, James Fry, the chairman of U.K.-based commodity consultant LMC International, said yesterday in an interview.
“There’s an expectation that India won’t up its exports in a big way, and that’s why prices are higher,” Fry said.
To contact the reporters on this story: Chris Kay in London at ckay5@bloomberg.net; Debarati Roy in New York at droy5@bloomberg.net
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net.
