Sugar Futures May Rise This Week as Global Supplies Tighten, Survey Shows

Sugar futures may rise on speculation that global supplies are tightening, according to a Bloomberg survey.

Five of nine traders, analysts and brokers surveyed by Bloomberg News said raw sugar traded in New York will rally. Two predicted a drop, and two said the price will be little changed. Raw sugar rose 4.3 percent this week to 20.81 cents a pound yesterday on ICE Futures U.S.

The “market is pretty strong, especially because of the perspective of really tight supply/demand for sugar worldwide,” Bruno Lima, a risk-management consultant at FCStone in Campinas, Brazil, said in an e-mail, citing lower production in Brazil’s Center-South, the largest growing region.

Output in Brazil, the world’s biggest exporter, will increase less than previously forecast this year as dry weather may hurt crops, according to the Agriculture Ministry’s crop- forecasting agency, known as Conab.

Five of nine respondents in the Bloomberg survey said white sugar traded on London’s Liffe exchange will rally. Two said the price will decline, and two forecast little change. Refined sugar gained 2.6 percent this week to $592.20 a metric ton.

Refined sugar’s premium over raw sweetener will probably widen, according to six of nine surveyed. Two said the spread will narrow, and one forecast little change.

In the attached chart, red bars are derived by subtracting bearish forecasts from bullish estimates for raw sugar, with readings above zero signaling that most respondents expect higher prices. The green line shows raw-sugar prices, and the blue line shows white sugar.

Bullish on raw sugar: 5       Bearish: 2     Neutral: 2
Bullish on refined sugar: 5   Bearish: 2     Neutral: 2
Widening refined premium: 6   Narrow: 2      Neutral: 1

To contact the reporters on this story: Elizabeth Campbell in Chicago at ecampbell14@bloomberg.net; Alistair Holloway in London at aholloway1@bloomberg.net.

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