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Sugar Climbs After Brazil’s Gasoline Price Rise; Coffee Falls

Sugar climbed on speculation that millers in Brazil, the world’s largest producer, will direct more cane to ethanol production after a gasoline price rise in the South American nation. Coffee and cocoa fell.

Petroleo Brasileiro SA (PETR4), Brazil’s state-controlled oil company, will raise gasoline prices at refineries by 6.6 percent, according to a Securities and Exchange Commission filing dated yesterday. That may boost ethanol consumption, as most cars can run on both a mixture of gasoline and ethanol as well as on pure biofuel.

The increase is “positive for sugar as there will be more demand for ethanol, which is a huge sector in Brazil,” Edward de Wismes, an agricultural futures broker at Aurel BGC in Paris, said by e-mail today. “It’s likely that millers will direct more cane to ethanol instead of sugar.”

Raw sugar for March delivery rose 1.8 percent to settle at 18.71 cents a pound at 1:46 p.m. on ICE Futures U.S. in New York. The commodity has slumped 22 percent in the past year on forecasts for a surplus in supply as output in Brazil increases.

“The sugar sector would have liked something more, but right now they will take what they can get,” Michael McDougall, the head of the Brazil desk at Newedge Group in New York, said today in a report.

Arabica-coffee futures for March delivery fell 1.4 percent to $1.477 a pound on ICE, snapping a three-session advance.

Cocoa futures for March delivery dropped 0.7 percent to $2,179 a metric ton in New York.

To contact the reporters on this story: Isis Almeida in London at ialmeida3@bloomberg.net; Yi Tian in New York at ytian8@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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