White Sugar Climbs Most in 3 1/2 Months

White sugar rose the most in 3 1/2 months in London after a report that Sudan bought 100,000 metric tons of the sweetener.The price was $60 million, according to the report by Sudan’s state-run SMC news agency, indicating that the product was white, or refined, sugar costing $600 a ton.

White sugar for May delivery on the Liffe exchange is $27.90 a ton more expensive than August-delivery sweetener, up from a $19.60 spread at last week’s end.

“There’s buying pressure focused on the May contract in London, which could well be linked to Sudan,” said James Kirkup, director and head of sugar brokerage at Fortis Bank Nederland in London. A 100,000-ton purchase would be a “significant quantity,” he said.

White sugar for May delivery climbed $17, or 3.5 percent, to close at $503 a ton on Liffe, the biggest jump for that contract since Dec. 14. Prices posted a sixth straight weekly drop last week. Raw sugar for May delivery gained 2.8 percent to 17.47 cents a pound on ICE Futures U.S. in New York at 5:50 p.m. London time.

As much as two inches of rain fell in growing areas over the weekend in Brazil, the world’s largest sugar producer, raising the potential for harvest delays, according to Dale Mohler, agricultural meteorologist at AccuWeather Inc. in State College, Pennsylvania. Sugar prices more than doubled last year as excess rains curbed output in Brazil.

Weather Forecasts

The rain is “probably getting people a little edgy,” Mohler said. Forecasts call for drier weather to return next month and into May, he said.

The sweetener has tumbled 33 percent this year as forecasts for improved crop prospects in India curbed demand from investors and importers.

Prices “may have found a floor as a base for a new rise due to ongoing tight fundamentals for the remainder of the 2009- 10 season,” German research company F.O. Licht said in a twice- a-month report.

Cuban raw-sugar output is about 100,000 tons behind plans to produce 1.3 million tons this season, Licht said. Pakistan has produced 2.96 million tons of refined sugar this season to March 17, compared with domestic demand of 4.3 million tons, according to the researcher, which cited Industry and Production Minister Mir Hazar Khan Bijarani.

Robusta coffee for May delivery rose 2.4 percent to $1,371 a ton on Liffe, the highest closing price since Dec. 16.

Traders were probably net short, or betting on lower prices, by 25,000 contracts and have closed 10,000 to 12,000 contracts as prices rebounded, according to estimates by Ralph Hawes, head of the sugar desk at Sucden in London. Robusta has gained 5.5 percent this month.

Cocoa for May delivery increased 1.4 percent to 2,246 pounds ($3,362) a ton.

source: businessweek