Sugar Falls on Signs of Oversupply in Brazil, India; Cocoa Drops

Sugar, heading for a second straight annual drop, retreated in New York on signs of large supplies from top producers Brazil and India and weak demand. Cocoa slid.

Sugar output in Brazil’s center south, the main producing region of the world’s biggest grower, will total 34.05 million metric tons in 2012-13, up from a previous forecast of 32.7 million tons, industry group Unica said Dec. 20. Sugar production in second-ranking India was 4.8 million tons from Oct. 1 through Dec. 15, the Indian Sugar Mills Association said. Weak demand for Brazilian sugar is reflected in discounts being offered for the sweetener, according to Archer Consulting.

“We expect the third consecutive global surplus in 2012- 13, amid stronger-than-expected production in Brazil and better- than-expected production from India,” Kate Tang, an analyst at Barclays Plc in London, said in a report e-mailed Dec. 21. The glut will “continue to pressure the sugar market.”

Raw sugar for March delivery dropped 0.3 percent to 19.20 cents a pound by 7:45 a.m. on ICE Futures U.S. in New York. White, or refined, sugar for March delivery fell 0.3 percent to $516.50 a ton on NSYE Liffe in London.

The global sugar surplus will be 1 million tons higher with bigger-than-expected output from Brazil’s center south, said Paul Bannister, head of sugar brokerage operations at Marex Spectron Group. Raw sugar from Brazil for loading this month was at a discount of 0.5 cent to 0.7 cent a pound to the price on ICE, Arnaldo Luiz Correa, a director at Sao Paulo-based Archer Consulting, said in a report e-mailed Dec. 22.

Raw sugar lost 18 percent this year after sliding 27 percent in 2011, the biggest decline in a decade. Prices swung between 18.81 cents a pound and 19.46 cents a pound last week.

Producer Sales

“It appears that two things happen on price weakness. The first is that the producers stop selling, confident that the Brazilian government will raise the domestic gasoline price and with it the ethanol floor under the market,” Kingsman SA said in a report e-mailed today. “The second is that end-users and importers get on with their pricing and their physical buying.”

Cocoa for March delivery fell 0.6 percent to $2,299 a ton ICE. It’s up 9 percent this year. Cocoa for March delivery fell 0.6 percent to 1,460 pounds ($2,361) a ton on NYSE Liffe. The commodity gained 5.8 percent this year.

Arabica coffee for March delivery was up 0.4 percent to $1.4725 a pound in New York. It’s fallen 35 percent this year. Robusta coffee for March delivery advanced 0.6 percent to $1,906 a ton in London, 5.3 percent higher this year.

To contact the reporter on this story: Isis Almeida in London at Ialmeida3@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at Ccarpenter2@bloomberg.net.

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