Sugar Declines as Brazil Millers Favor Sweetener; Cocoa Advances

Sugar fell for a second day in London and in New York after millers in Brazil’s main growing region directed more of the cane crop to making the sweetener at the expense of ethanol. Cocoa advanced.

Millers in Brazil’s center-south, the main growing region of the world’s biggest producer, directed 47.8 percent of all the cane processed in the first half of August to making sugar, according to industry group Unica. That’s up from 45 percent two weeks earlier. Producers switched to making more sugar as a weaker real meant ethanol is 2 cents a pound cheaper than the sweetener, Macquarie Group Ltd. (MQG) said in a report yesterday.

“It shows the industry is responding to price signals,” Jonathan Kingsman, managing director of researcher Kingsman SA in Lausanne, Switzerland, said by phone, commenting on Unica’s figures. “Ethanol is paying much less still than sugar, so the sector has moved more toward sugar over the past month.”

White sugar for delivery in October decreased 0.7 percent to $476.30 a metric ton by 11:31 a.m. on NYSE Liffe in London, declining for the seventh session in eight. Raw sugar for delivery in the same month fell 0.2 percent to 16.43 cents a pound on ICE Futures U.S. in New York.

The Brazilian real declined 13.5 percent this year, the third-worst performer in a basket of 24 emerging market currencies tracked by Bloomberg. The Indian rupee is the worst, followed by the South African rand. Weaker currencies encourage millers to export more of the sweetener priced in U.S. dollars. India is the world’s second-biggest sugar producer.

“The weakening rupee increases the chance of seeing significant Indian exports next year from their domestic production,” Kingsman said.

India

Sugar shipments from India may exceed 1 million tons in the year beginning Oct. 1, said Narendra Murkumbi, managing director of Mumbai-based Shree Renuka Sugars Ltd. (SHRS) Exports will probably be 500,000 tons to 1.5 million tons, Manish Gupta, head of sugar trading at Olam India, said in an interview earlier this month.

Robusta coffee for November delivery was little changed at $1,771 a ton on NYSE Liffe. Arabica coffee for delivery in December climbed 0.6 percent to $1.1745 a pound on ICE.

Cocoa for delivery in December rose 0.7 percent to 1,640 pounds ($2,539) a ton in London. Cocoa for delivery in the same month advanced 0.6 percent to $2,468 a ton in New York.

To contact the reporter on this story: Alex Pashley in London at apashley@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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