Sugar Futures Advance to One-Week High as Floods Reduce Crop in Pakistan
Sugar prices climbed to a one-week high on speculation that crop damage from floods in Pakistan will spur demand for imports.
Floods destroyed 200,000 acres (80,937 hectares) of cane, a farm group in Pakistan said. Production in the year starting Oct. 1 was estimated at 3.77 million metric tons, requiring imports of 700,000 tons, the U.S. Department of Agriculture has said.
“Any production losses will see Pakistan’s import requirements increase,” said James Kirkup, the head of sugar broking at ABN Amro Markets (U.K.) Ltd. in London. Industry estimates put losses at 500,000 tons, meaning Pakistan’s imports may be closer to 900,000 tons, he said.
Raw sugar for October delivery gained 0.71 cent, or 3.9 percent, to close at 18.97 cents a pound at 2 p.m. on ICE Futures U.S. in New York. Earlier, the price reached 19.06 cents, the highest level for a most-active contract since Aug. 5. The commodity has dropped 30 percent this year.
Pakistan probably has enough inventory after recent tenders to meet demand for several months, said Sergey Gudoshnikov, an economist at the International Sugar Organization in London.
“If the fields are destroyed, there’s no time to replant and grow cane for the coming season,” Gudoshnikov said. “If Pakistan believes the sugar market is going to continue to go up, they may buy now.”
Refined-sugar futures for October delivery rose $17, or 3.2 percent, to $549.60 a ton on the Liffe exchange in London.
“The underlying fundamentals are constructive,” said Jeff Bauml, a senior vice president at R.J. O’Brien & Associates, a broker in New York.