Sugar Rises as Output Declines in Brazil

Sugar climbed for a fourth day in New York as output dropped in top producer Brazil amid signs of stronger global demand. Cocoa retreated.

Sugar output in the main Brazilian producing region slumped 17 percent to 1.55 million metric tons in May’s first half from a year earlier, industry group Unica said yesterday. Mexico and the European Union increased import allowances this week. Demand is building in Muslim countries before Ramadan.

“Brazil’s slow start of the crop, reiterated and confirmed by the last report of Unica, continues to chew over the sugar market,” Naim Beydoun, a broker at Swiss Sugar Brokers in Rolle, Switzerland, wrote in a report today. “Sugar is lagging 2 million tons behind last year’s output for the same period.”

Raw sugar for July delivery rose 0.11 cent, or 0.5 percent, to 22.80 cents a pound by 7:22 a.m. on ICE Futures U.S. in New York. White, or refined, sugar for August delivery gained $5.10, or 0.8 percent, to $655.10 a ton on NYSE Liffe in London.

Brazilian production fell on a combination of lower yields, harvest delays and use of a greater portion of raw material to make ethanol instead of sugar.

“With sugar yields down and demand for ethanol still high, we can imagine that sugar production will continue to trail year-ago levels for several weeks,” Luis Rangel, vice president of commodity derivatives at ICAP Futures LLC, wrote in a report yesterday. “We continue to look for higher prices in the short term.”
Tunisian Purchase

Tunisia bought 18,000 tons of white sugar and 14,000 tons of raw sweetener in a tender yesterday, Khaled Ksouri, a purchasing manager at the Tunisian Office for Trade, said by phone. Mexico boosted sugar-import quotas by 150,000 tons and EU nations voted to import a further 200,000 tons of raw or refined sweetener at zero duty.

Arabica coffee for July delivery climbed 0.3 percent to $2.6645 a pound in New York. Robusta coffee for July delivery slipped $1 to $2,599 a ton in London.

Cocoa for July delivery dropped 0.1 percent to $3,007 a ton on ICE. Cocoa for July delivery fell 4 pounds, or 0.2 percent, to 1,845 pounds ($3,030) a ton on NYSE Liffe.

source: bloomberg