Raw Sugar Rebounds After Brazil Ethanol Rally; Cocoa Declines

Raw sugar rose in New York after four sessions of declines as higher ethanol prices in Brazil, the leading producer of the sweetener, spurred speculation millers will use more cane to make the biofuel. Cocoa declined.

Ethanol futures yesterday reached the highest level since May 8 on the BM&F Bovespa, Brazil’s futures exchange. Millers in center south, the country’s main growing region, used 58 percent of all cane processed to make ethanol rather than sugar in May’s second half, data from industry group Unica showed. That was up from 52 percent a year earlier.

“Ethanol production has picked up quite significantly in the last period of Unica’s report, but it remains to be seen whether this continues to be the case,” Stefan Uhlenbrock, an analyst at researcher F.O. Licht GmbH, said by phone today. “The market has come down significantly, so it’s more or less natural that there’s some recovery sooner or later, but I’m rather pessimistic that this would be a sustained recovery.”

Raw sugar for delivery in October rose 0.3 percent to 16.58 cents a pound by 8:31 a.m. on ICE Futures U.S. in New York. White, or refined, sugar for delivery in August advanced 0.4 percent to $475.40 a metric ton on NYSE Liffe in London.

Millers in center south will use 45.2 percent of the cane harvest to make sugar in the 2013-14 season begun in Brazil in April, according to Green Pool Commodity Specialists Pty. That is below a prior estimate of 47.6 percent and last year’s 49.4 percent, the company said in its second estimate for the season.

Cocoa for delivery in September declined 2 percent to $2,263 a ton on ICE. Cocoa for delivery in July fell 2.3 percent to 1,472 pounds ($2,303) a ton on NSYE Liffe.

Ivory Coast, the world’s largest producer of cocoa, will refund exporters and processors buying undersized beans from June 17 to July 31, industry regulator Le Conseil du Cafe-Cacao said today on its website.

The payments will vary from 58 to 130 CFA francs per kilogram, the regulator said. Refunds will apply to purchases of cocoa of 116 to 140 beans per 100 grams.

Arabica coffee for delivery in September gained 0.1 percent to $1.255 a pound on ICE. Robusta coffee for the same delivery month rose 1.6 percent to $1,758 a ton in London.

“The market has been under pressure on improving conditions in Ivory Coast, but has started to find some support with industry buying like they did at the end of May, when the market reached the 1,500 pounds-a-ton area,” Jerome Jourquin, head of agricultural commodity derivatives at brokerage Aurel BGC in Paris, said by e-mail today.

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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