Sugar Rises, Rebounding From Drop, on Concern Stocks to Tighten Next Year

Sugar rose in London and New York, rebounding from the biggest drop in more than a week amid concern that global inventories of the sweetener will shrink next year, when consumption may exceed supply for a third year.

The world sugar deficit may be 2.8 million metric tons for the year ending next September after adverse weather in Brazil, the world’s largest producer, and Russia held back output, London-based broker Czarnikow Group Ltd. said Nov. 29. Supply trailed demand in the past two years.

“Many trading houses are already adjusting their world supply/demand forecast for the 2010-2011 season to show a world production deficit,” researcher Hightower Report said in a commentary yesterday. “This would suggest that world ending stocks will tighten further into the spring of 2011.”

White, or refined, sugar for March delivery rose as much as 3.2 percent to $732.80 a ton on NYSE Liffe in London before trading at $727.60 at 2:10 p.m. The contract shed 2.4 percent yesterday, the most since Nov. 19.

Yesterday “was a technical decline based on activities in other markets and on the continuing strength of the dollar,” Sucden Financial said in a market comment today. “Yesterday could be considered a technical shake-out of recent longs. The fundamental news is unchanged.”

Raw sugar for March delivery rose as much as 4.2 percent to 28.70 cents a pound on ICE Futures U.S. in New York, before trading at 28.48 cents recently.

Sugar production in Maharashtra, India’s biggest producer, fell 10 percent in the season that began Oct. 1 after heavy rainfall in the main growing areas slowed harvests, a producer group said.

China Sugar Shortage

China may have a refined-sugar shortage of 2.5 million tons in 2010-2011 that needs to be met by imports or selling reserves, the China Merchandise Reserve Management Centre said in a report on its website today.

Cocoa for March delivery fell 1.5 percent to 1,875 pounds ($2,925) a ton on NYSE Liffe. The chocolate ingredient for March delivery lost 1.3 percent to $2,771 a ton in New York.

Cocoa prices may ease in the next few months following a mostly peaceful election in Ivory Coast, Rabobank said in an e- mailed report. The election results were still to be fully announced or accepted, the bank said. The country is the largest producer of the beans.

Cocoa “will likely shift lower as a risk premium which has been factored into prices erodes,” Rabobank said.

Robusta coffee for March delivery slipped 0.4 percent to $1,801 a ton in London. Arabica beans for March delivery fell 0.2 percent to $2.0085 a pound in New York.

To contact the reporter on this story: Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net.

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.

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