sugar options

sugar futures

September 6th, 2013

Sugar rose to the highest in almost three weeks in New York as rising demand may mean a smaller surplus and a stronger Brazilian real reduced the incentive for exports from the world’s top producer. Coffee gained.

Sugar production will outstrip demand by 2 million metric tons in the 2013-14 season that starts in October in most countries, according to Czarnikow Group Ltd., which has clients in 83 countries. That’s down from a previous forecast of 3.9 million tons. The Brazilian real gained yesterday for a fourth session and reached the highest since Aug. 14. A stronger local currency reduces the incentive for exports priced in dollars.

“We’ve had a couple of bullish news this week, with a stronger real, some patchy rains in the center south of Brazil and a large trade house reducing their surplus for 2013-14,” Kona Haque, an analyst at Macquarie Group Ltd. in London, said by phone today. “Sucrose content is running behind last year, so any additional rainfall will affect that further.”

Raw sugar for delivery in October rose 1 percent to 16.68 cents a pound by 6:26 a.m. on ICE Futures U.S. in New York and touched 16.69 cents, the highest since Aug. 19. White sugar for October delivery gained 1.4 percent to $491.70 a ton on NYSE Liffe in London.

Rain this week disrupted harvesting in parts of center south, Brazil’s main growing region, Sao Paulo-based weather forecaster Somar Meteorologia said in a report two days ago. Sucrose content in cane was 1.1 percent lower in the second half of August compared to the first 15 days of the month, data from industry group Unica showed.

Coffee, Cocoa

Arabica coffee for December delivery advanced 0.9 percent to $1.1785 a pound on ICE. Robusta coffee for delivery in November was 0.5 percent higher at $1,768 a ton on NYSE Liffe.

Robusta coffee stockpiles with a valid grading certificate in warehouses monitored by NYSE Liffe were 77,030 tons on Sept. 2, down 2.2 percent from 78,750 tons two weeks earlier.

Cocoa for December delivery gained 0.1 percent to $2,569 a ton in New York. Cocoa for December delivery was down 0.1 percent to 1,703 pounds ($2,651) a ton in London.

Cocoa jumped 23 percent yesterday from a 14-month closing low on March 4, entering a bull market. Global demand will outstrip supply by 209,000 tons in 2012-13, KnowledgeCharts, a unit of Commodities Risk Analysis in Bethlehem, Pennsylvania, estimates. That’s bigger than the 52,000-ton deficit forecast by the International Cocoa Organization. The shortage next season will amount to 188,000 tons, KnowledgeCharts data show.

- Isis Almeida in London at Bloomberg.