BLBG:Sugar Gains as Lower Price May Spur Demand; Robusta Coffee Rises
Sugar, down 5.1 percent this year, climbed in London on speculation lower prices will spur demand just as millers in top producers Brazil may produce more ethanol when the harvest starts in April. Robusta coffee gained.
Iraq, the third-biggest white sugar importer, bought 200,000 metric tons last week. The country is forecast to import 795,000 tons in the 2012-13 season that started Oct. 1, according to the London-based International Sugar Organization. Millers in Brazil may choose to make more ethanol this year, futures broker Marex Spectron Group in London said in a report.
“End users may be viewing the current market as a buying opportunity,” Keith Flury, a senior commodities analyst at Rabobank International in London, said by e-mail today. “The recent Iraq tender is likely seen as supportive.”
White, or refined, sugar for May delivery was 1.4 percent higher at $497 a ton by 11:20 a.m. on NYSE Liffe in London, paring gains of as much as 1.7 percent. ICE Futures U.S., where raw sugar, arabica coffee and dollar-denominated cocoa trade, is closed today for the Presidents Day holiday.
“In the last two weeks, the ethanol parity has risen and the sugar market price has fallen, so that we can now expect center south Brazil mills to favour ethanol over sugar production in the new crop,” Paul Bannister, head of sugar brokerage at Marex Spectron, said in the report.
Supplies of raw sugar may be limited, with the futures for March delivery having moved to a premium of 0.26 cents a pound to the May contract at the end of last week, reversing a discount in the previous 7-day period, data on Bloomberg showed. The March futures expire on Feb. 28 and the exchange will announce the delivery on March 1.
“With a little over a week remaining before the March expiry, the firming spread is suggesting potential physical tightness,” Tom McNeill, a director at Brisbane, Australia- based researcher Green Pool Commodity Specialists Pty., said in a report e-mailed today. “Some are pointing to logistical constraints in center south Brazil, where grain and oilseeds exports compete with sugar at the ports.”
Robusta coffee for delivery in May climbed 0.4 percent to $2,065 a ton on NYSE Liffe and cocoa for delivery in March gained 0.1 percent to 1,410 pounds ($2,181) a ton.
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.
