BLBG:White Sugar Gains as Demand Leaves Limited Supply; Cocoa Falls
Sugar climbed for a sixth day in London, the longest winning streak in more than seven months, on speculation lower prices have spurred demand, leaving limited supplies. Cocoa slipped.
The premium white sugar commands over the raw variety climbed to $123 a metric ton, the highest since Oct. 9, data compiled by Bloomberg showed. White sugar for May delivery was $17.60 a ton more expensive than the futures for August, reversing a discount on Feb. 18. That market structure, in which earlier-dated futures contracts are more expensive than later ones, is known as backwardation and may signal limited supplies.
“Whites are visibly in short supply,” Paul Bannister, head of sugar brokerage at Marex Spectron Group in London, said in a report e-mailed today, adding that availability of raw sweetener was also limited due to logistical hurdles in Brazil, the world’s largest producer. “We can only assume that this unexpected shortage of physicals must mean that, for whatever reason, demand has been unexpectedly high.”
White sugar for May delivery was 0.3 percent higher at $535.60 a ton by 11:19 a.m. on NYSE Liffe in in London. The price climbed for a sixth day, the longest winning streak since July 20. Raw sugar for May delivery fell 0.2 percent to 18.72 cents a pound on ICE Futures U.S. in New York.
Sugar gained 3.9 percent in London and 4.7 percent in New York last week on speculation Brazil would take more measures to support ethanol production at the expense of the sweetener. A 5 percent increase in diesel prices there prompted “hopes that the gasoline price would also be increased” in some quarters, researcher Kingsman SA said in a report e-mailed today.
Ethanol
A reduction of taxes applied to ethanol is also likely in April, Kingsman said. Ethanol tax may fall to about 30 reais ($15) a cubic meter (35 cubic feet) from 120 reais a cubic meter now, Sao Paulo-based broker J. Safra Corretora said in report dated March 8. A rise in gasoline prices and a reduction in ethanol taxes would increase demand for the biofuel.
“This should both reduce ethanol prices at the pump and increase millers’ production margins,” Lausanne, Switzerland- based Kingsman said. “With the government now on their side the mills feel in no hurry to get on with their pricing.”
Cocoa for May delivery fell 0.1 percent to 1,440 pounds ($2,142) a ton on NYSE Liffe. Cocoa for May delivery slid 0.3 percent to $2,114 a ton on ICE.
Robusta coffee for delivery in May was up 0.5 percent to $2,192 a ton in London. Arabica coffee for delivery in May slid 0.2 percent to $1.4375 a pound in New York.
To contact the reporter on this story: Isis Almeida in London at ialmeida3@bloomberg.net
To contact the editor responsible for this story: John Deane at jdeane3@bloomberg.net
