Raw sugar climbed in New York on speculation the amount of sweetener delivered against the expired July futures contract will be the smallest in seven years. Cocoa retreated and coffee advanced.
The raw sugar delivery for July may be about 144,000 metric tons, Sao Paulo-based consultancy Archer Consulting estimates. That would be the smallest for a July contract since 2006, data from the ICE Futures U.S. exchange showed. The sweetener will come mainly from El Salvador and Argentina, Arnaldo Luiz Correa, a director at Archer, said in a report e-mailed on June 29. London-based broker Marex Spectron Group said in a report dated today that sugar from Mexico may also be delivered.
“The small volume compared to initial forecasts for a monster delivery can be considered bullish,” said Archer’s Correa. “The premiums in the physical market appreciated to such a level that hindered any delivery of Brazilian sugar.”
Raw sugar for delivery in October gained 0.7 percent to 17.04 cents a pound by 5:44 a.m. on ICE. Futures trading volumes were 25 percent below the average for the past 100 days for this time of day, according to data compiled by Bloomberg. White sugar for October delivery was 0.3 percent higher at $486 a ton on NYSE Liffe in London.
The delivery was estimated to top 1 million tons, with most of the sugar coming from Brazil, Alex Oliveira, a trader with Newedge Group in New York, said on June 26. The premium buyers have to pay to obtain sugar from Brazil climbed before the delivery, according to Swiss Sugar Brokers.
Sugar price gains are capped by weaker currencies in Brazil and India, the world’s leading producers, Lausanne, Switzerland-based researcher Kingsman SA, a unit of McGraw-Hill Financial Inc. (MHFI)’s Platts, said in a report e-mailed today. Brazilian producers sold sugar for delivery in “distant months,” while Indian exporters sold 50,000 tons to 100,000 tons of white sweetener, Marex Spectron said. The Brazilian real was the worst performer last quarter in a basket of 24 emerging-market currencies, followed by the Indian rupee, according to data compiled by Bloomberg.
“The weak real has encouraged Brazilian producers to get on with their selling for both this crop and next while at the same time flipping the relative returns back in favor of sugar and away from ethanol,” Kingsman said. “A weak rupee has encouraged fresh export sales from India.”
Arabica coffee for delivery in September gained 0.7 percent to $1.212 a pound on ICE. Robusta coffee for delivery in September gained 0.3 percent to $1,765 a ton on NYSE Liffe.
Cocoa for September delivery was down 0.8 percent to $2,147 a ton in New York. Cocoa for September delivery slid 1.1 percent to 1,442 pounds ($2,198) a ton in London.
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.