Wednesday, 25 March 2015 21:51
LONDON: Raw sugar futures turned higher on Wednesday as a weaker dollar helped the market rebound from a 6-year low but the scope for significant recovery was expected to be capped by plentiful supplies.
Dealers said currency factors were playing a dominant role in the market with a further fall in the value of Brazil’s real earlier in the day sending sugar prices to a fresh low before the currency staged a modest recovery as the dollar fell after weaker-than-expected U.S. economic data.
“The weakness of the Brazilian real has been a big factor in pushing the price down while the prospect of a reasonably good sugar cane harvest in Brazil has also been a factor weighing on the market,” Capital Economics analyst Hamish Smith said.
May raw sugar futures were up 0.08 cents or 0.6 percent at 12.53 cents a lb at 1518 GMT after earlier slumping to a 6-year low of 12.31 cents.
Twenty Brazilian mills had crushed 1.24 million tonnes of cane from the 2015/16 crop by March 15, starting production early, industry association Unica said on Tuesday.
Analyst F.O. Licht on Tuesday forecast a modest rise in the cane crush in the key Centre-South region of Brazil this year but a small drop in sugar production as an increased proportion of the cane is used to produce ethanol.
Smith said, however, that a weak real may limit the extent of any switch to ethanol by making sugar exports more attractive in local currency terms.
May white sugar futures were unchanged at $ 364.80 a tonne.
Arabica coffee futures also turned higher with May up 3.25 cents or 2.4 percent at $ 1.4055 per lb.
The market was also tracking the fortunes of Brazil’s currency while a forecast indicating the world’s top producer may have a smaller crop this year provided some support.
INTL FCStone on Wednesday forecast that Brazil’s 2015 coffee production should be around 44.0 million to 45.5 million bags, down from 48 million to 49 million last year.
May robusta coffee futures was up $ 3 or 0.2 percent at $ 1,821 a tonne.
Cocoa futures were little changed with May New York down a marginal $ 1 at $ 2,782 a tonne while May London cocoa rose 1 pound to 1,949 pounds.
Copyright Reuters, 2015
