Wednesday, 11 November 2015 00:40
LONDON: Raw sugar futures on ICE rallied more than 6 percent on Tuesday on growing concerns about poor sugar content in centre-south Brazil due to wet weather.
Robusta coffee steadied as traders weighed up the potential impact of dry weather on output in Brazil and Indonesia, while cocoa rose, with dealers tracking the effects of dry weather on main crops in West Africa.
ICE benchmark raw sugar rallied to a peak of 14.87 cents a pound after a Brazilian cane crush report for the second half of October, and traded at 14.68 cents a pound, up 0.69 cents or 4.9 percent, at 1536 GMT.
Brazil’s centre-south mills crushed 38.38 million tonnes of cane in the second half of October after 36.13 million tonnes in the first half, a slight recovery after rains slowed operations, cane industry group Unica said on Friday.
Excess humidity, however, has been hurting sugar yields, down to 53 kilograms per tonne of cane on average through the end of October from 57.2 kg/tonne this time last year.
Michael McDougall, director of commodities for Societe Generale in New York, said the price rally was a reflection that sugar content in the Brazilian cane crop will be low this year.
“This (Unica) report shows you the sugar content is poor, particularly in Sao Paulo state,” he said, adding that November had got off to a bad start too.
“The first week of November has been a disaster for the crush. Potentially the mills will fall further and further behind.”
He said the market was also bouncing after finding technical support at 14 cents a pound.
“What we’ve seen is a (downward) correction from a significant rally over a short period of time,” he said. “We tested the 14-cent level and found buying below there.”
Michael Liddiard of consultancy Agrilion in London said it was unlikely sugar producers were selling after the recent price fall, so trade and funds were buying back what they had sold.
March white sugar was up $ 8.20, or 2.2 percent, at $ 383.90 per tonne.
London March cocoa was up 34 pounds, or 1.6 percent, at 2,229 pounds per tonne, after touching a contract high of 2,236 pounds, supported by a soft pound which makes sterling-based contracts cheaper in other currencies.
New York March cocoa was up $ 57, or 1.8 percent, at $ 3,273 per tonne with volume boosted by December/March spread trading.
Robusta coffee futures were steady, underpinned by concerns over the impact of the El Nino weather pattern on production.
January robusta was down $ 2 at $ 1,623 per tonne, while December arabica was down 0.55 cents, or 0.5 percent, at $ 1.1720 per lb.
