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Sugar Gains for Third Straight Year; Coffee Jumps 77% in 2010, Cocoa Falls

Sugar futures jumped 5.7 percent today, capping the third straight annual gain, on renewed speculation that global supplies will fall short of consumption. Coffee had the biggest yearly rally since 1994.

Worldwide demand will reach 165.3 million metric tons in the year ending Sept. 30, topping supplies by almost 3 million tons, ABN Amro Bank NV and VM Group have said. In the second half of 2010, sugar prices doubled, leading gains in the period among 19 raw materials in the Thomson Reuters/Jefferies CRB Index.

“There is going to be a production response that will help temper the rally, assuming there are no production disruptions,” said Keith Flury, an analyst at Rabobank International in London. “If there are any disruptions, there would be a significant reaction. There just isn’t enough sugar around.”

Raw sugar for March delivery climbed 1.74 cents to settle at 32.12 cents a pound at 2 p.m. on ICE Futures U.S. in New York. The percentage gain was the biggest since Nov. 18. Yesterday, the price plunged 10 percent, the largest drop since Nov. 12.

The tumble “brought out some bargain hunters,” Flury said. The price rose 19 percent this year after plunging 40 percent in the first half. The commodity more than doubled in 2009.

In London refined-sugar futures for March delivery jumped $16.20, or 2.1 percent, to $777.50 a metric ton on NYSE Liffe. The price climbed 9.5 percent this year.

Brazil’s Production

In Brazil, the world’s largest producer, output in the main growing area in the Center South was down 18 percent in the second half of November from a year earlier, industry group Unica said on Dec. 14.

Rising food prices in India, the second-biggest producer, may spur the government to limit exports, Toby Cohen, the head of analysis at Czarnikow Group Ltd. in London, said this week.

Arabica-coffee futures for March delivery gained 4.2 cents, or 1.8 percent, to $2.405 a pound in New York. This year, the price surged 77 percent, the third-biggest gain among 19 raw materials in the Thomson Reuters/Jefferies CRB Index, behind cotton and silver.

On Dec. 22, futures reached $2.4225, the highest since 1997, on concern that the crop in Brazil, the biggest grower, would deteriorate after excessive rains.

In London, robusta-coffee futures for March delivery climbed $13, or 0.6 percent, to $2,097 a ton. The price gained 62 percent this year.

Cocoa futures for March delivery rose $35, or 1.2 percent, to $3,035 a ton. In 2010, the price dropped 7.7 percent, snapping a four-year rally.

Among CRB components, natural gas dropped 21 percent this year, the only other annual decline.

In London, cocoa for March delivery dropped 6 pounds, or 0.3 percent, to 2,017 pounds ($3,136) a ton.

To contact the reporters on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net; Debarati Roy in New York at droy5@bloomberg.net.

To contact the editor responsible for this story: Patrick McKiernan at pmckiernan@bloomberg.net.

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