Sugar Rises on Speculation Surplus May Be Reduced; Cocoa Falls

Sugar rose for a fourth day in New York, the longest streak in more than three months, on speculation plunging output in top producer Brazil may help reduce the world surplus. Cocoa fell.

Output in Brazil’s main producing region fell 69 percent to 795,000 metric tons between the start of the harvest in mid- March and the end of April, industry group Unica said May 12. Global sugar production will exceed demand by 779,000 tons for the 2010-11 season that started in October, the International Sugar Organization estimated the next day.

“The tight spot supply situation in Brazil is acting as a counterweight to the expected onslaught of world sugar supplies in the second half of the year,” Luis Rangel, vice president of commodity derivatives at ICAP Futures LLC in Jersey City, New Jersey, wrote in a report e-mailed today.

Raw sugar for July delivery rose 0.12 cent, or 0.6 percent, to 21.89 cents a pound by 7:56 a.m. on ICE Futures U.S. in New York. That is the fourth consecutive gain for that contract, the longest gain since Feb. 2. White, or refined, sugar for August delivery climbed $6.90, or 1.1 percent, to $613.90 a ton on NYSE Liffe in London.

Demand has increased as buyers seek to rebuild stocks, Heloisa Lee Burnquist, an analyst at Cepea, a University of Sao Paulo research group, said in a note yesterday. “An apparent increase in the demand prevented prices from dropping,” she said.
Rising Production

Sugar production is expected to “increase rapidly as we move through May, which should see increased domestic and export availability,” broker C. Czarnikow Sugar Futures Ltd. said in a report e-mailed on May 13.

Mills have stepped up sugar production as the harvest advances, reducing prices for crystal sugar in the Brazilian domestic market, according to Burnquist. Still, the price of crystal sugar within Brazil remains 18 percent more profitable than exports, she wrote in the note.

Cocoa for July delivery slipped $7 to $2,999 a ton on ICE. Cocoa for July delivery fell 14 pounds, or 0.8 percent, to 1,855 pounds ($3,015) a ton on NYSE Liffe.

Arabica coffee for July delivery was little changed at $2.6395 a pound in New York. Robusta coffee for July delivery dropped $6, or 0.2 percent, to $2,467 a ton in London.

source: bloomberg