Sugar Climbs to One-Week High on Brazil Real, Rain; Cocoa Rises

Sugar gained to a one-week high in New York as Brazil’s real advanced and rain in the country’s main growing region is set to disrupt harvesting. Cocoa rose.

A cold front will bring rain to some sugar-cane producing regions of Brazil, potentially disrupting the harvest, weather forecaster Somar Meteorologia said on July 15. Brazil’s real climbed the most among emerging-market currencies after the Mexican peso yesterday as Federal Reserve Chairman Ben S. Bernanke damped speculation that the U.S. central bank will curtail stimulus. A stronger real reduces incentives for millers to sell the sweetener priced in U.S. dollars.

Rains in the center south are reducing the crop’s potential to yield sugar, according to researcher Datagro Ltd. The region will produce no more than 34.1 million metric tons of sugar in the 2013-14 season that started in April, according to industry group Unica. That’s down from a previous forecast of 35.5 million tons. Millers are using more cane to make ethanol, Antonio de Padua Rodrigues, Unica’s technical director, said on July 16.

“It looks like speculators are covering their shorts before rain that may disrupt harvesting in Brazil’s center south,” Fabienne Pointier, an analyst at Lausanne, Switzerland-based researcher Kingsman SA, a unit of McGraw-Hill Financial Inc. (MHFI)’s Platts, said by e-mail today. “Unica has already cut their forecast for sugar production.”

Raw sugar for October delivery gained 0.5 percent to 16.16 cents a pound by 6:16 a.m. on ICE Futures U.S. in New York. The price touched 16.29 cents a pound, the highest for a most-active contract since July 11. White sugar for October delivery was up 0.6 percent at $462.50 a ton on NYSE Liffe in London.

Federal Reserve

Bernanke said in congressional testimony that the central bank’s asset purchases “are by no means on a preset course” as he sought to tamp down an increase in borrowing costs that threatens to slow the economic expansion. The real appreciated 1.2 percent to 2.2261 per U.S. dollar yesterday.

Arabica coffee for delivery in September was 0.7 percent higher at $1.2885 a pound on ICE. It rose 1.6 percent yesterday and 2.2 percent a day earlier. Robusta coffee for September delivery rose 0.1 percent to $1,952 a ton on NYSE Liffe.

“Fears of frost damage have caused the arabica coffee price to climb,” Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said in a report e-mailed today. “According to the weather forecasts, temperatures in the Brazilian coffee plantations could drop to zero in the coming week.”

Cocoa for September delivery advanced 0.8 percent to $2,319 a ton in New York. Cocoa for September delivery gained 0.8 percent to 1,598 pounds ($2,432) 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.

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