Sugar climbed in London and New York on speculation millers in Brazil, the world’s largest producer, will direct more cane to ethanol production after a gasoline price rise in the South American nation. Coffee gained. Petroleo Brasileiro SA (PETR4), Brazil’s state-controlled oil company, will increase gasoline prices at refineries by 6.6 percent, according to a Securities and Exchange Commission filing dated yesterday. That may boost ethanol consumption, as most cars can run on both a mixture of gasoline and ethanol as well as on pure biofuel. A 20 percent in increase in ethanol demand in the country would eliminate the sweetener surplus, Ben Pearcy, chief development officer and managing director of sugar and bioenergy at White Plains, New York-based Bunge, said on Nov. 28. “The increase in gasoline prices is positive for sugar as there will be more demand for ethanol, which is a huge sector in Brazil,� Edward de Wismes, an agricultural futures broker at Aurel BGC in Paris, said by e-mail today. “It’s likely that millers will direct more cane to ethanol instead of sugar.� White, or refined, sugar for March delivery rose 1.1 percent to $493.20 a ton by 11:11 a.m. on NYSE Liffe in London. Raw sugar for March delivery rose 1.6 percent to 18.68 cents a pound on ICE Futures U.S. in New York. Petrobras is the world’s most indebted publicly-traded oil company. It’s been importing gasoline at world prices and selling it at a loss domestically and is now seeking to eliminate the discount between the two, according to the filing. Fuel price controls, designed to contain inflation in Brazil amid lackluster economic growth, contributed to the company’s first quarterly loss in 13 years in the second quarter. The company reports fourth-quarter earnings Feb. 4. Sugar Supplies Millers in Brazil are still getting a better price for sugar than ethanol and even if prices favored output of the biofuel, losses in sweetener production would be 3.5 million tons, said Paul Bannister, head of sugar brokerage at Marex Spectron Group. Global sugar supplies will be 6.2 million tons higher than demand in the 2012-13 season started in October, a third consecutive year of surplus, according to the London-based International Sugar Organization. Cocoa for March delivery was unchanged at 1,435 pounds ($2,262) a metric ton in London. Cocoa for March delivery rose 0.1 percent to $2,198 a ton in New York. Robusta coffee for March delivery climbed 0.6 percent to $1,947 a ton on NYSE Liffe. Arabica coffee for March delivery rose 0.3 percent to $1.502 a pound on ICE. To contact the reporter on this story: Isis Almeida in London at Ialmeida3@bloomberg.net To contact the editor responsible for this story: Claudia Carpenter at Ccarpenter2@bloomberg.net.

Source