Sugar price up in NY as US economy shrinks less than forecast

NEW YORK—Sugar prices rose on Friday, ending a three-day slide and capping the first monthly gain since September after the government said the US economy shrank less than forecast and amid speculation that India’s imports will jump.

The US gross domestic product contracted at an annual pace of 3.8 percent in the fourth quarter, the Commerce Department reported. That’s less than the 5.5 percent median estimate of 79 economists surveyed by Bloomberg News. The Reuters/Jefferies CRB Index of 19 raw materials jumped as much as 1.4 percent. Industry and government officials in India said import barriers fell.

“The GDP number wasn’t as bad as expected and that bumped commodities a little bit,” said Patrick Donnelly, a broker at Peak Trading Group in Chicago.

Raw-sugar futures for March delivery rose 0.08 cent, or 0.6 percent, to 12.67 cents a pound on ICE Futures US in New York. The price fell 0.2 percent last week, after five-straight gains.

The most-active contract advanced 7.3 percent last month partly on speculation that prices would rise if India, the world’s second-largest sugar producer, becomes a net importer this year for the first time since 2005.

“India may well need to import as much as three million metric tons of sugar this calendar year to satisfy local demand,” Fortis Bank and VM Group said in a report on Friday.

Because of light volume, sugar’s gains weren’t “a good sign of strength,” said Nicholas S. Hayman, a senior trader at LaSalle Futures Group in Chicago. “No one trusts this rally. Funds are yet to aggressively buy into this market.”

Sugar rose as much as 2.8 percent earlier on Friday, the biggest advance in a week, before paring gains. It lost 2.6 percent in the three sessions through Thursday on concern that Indian processors won’t increase imports as much as anticipated. Prices may continue the downturn and fall to 12.5 cents by the middle of next week because “there’s simply no demand,” Hayman said.

India permitted duty free imports of the sweetener for sale domestically as output slumps, according to Vinay Kumar, managing director of the National Federation of Cooperative Sugar Factories Ltd. The trade ministry may announce the new rules in a day or two, Kumar said on Friday in a telephone interview in Mumbai. Bloomberg