Sugar Advances a Fourth Day Before Options Expiry; Cocoa Slides
Sugar gained for a fourth day in New York, the longest winning streak in almost a month, staying above 17 cents a pound for a second day before the expiry of the October options next week. Cocoa slid and coffee gained.
Investors held 26,122 options contracts on Sept. 6 giving them the right to buy raw sugar futures for delivery in October at 17 cents a pound, exchange data on Bloomberg showed. That was the most active option for that month and will expire on Sept. 16. Raw sugar closed above 17 cents a pound yesterday for the first time since Aug. 15. In London, the October white sugar futures expire this week. The Brazilian real rose to the highest level in almost a month yesterday, reducing the incentive for millers to export the sweetener priced in U.S. dollars.
“The impending expiration of the October options and October London futures added to the volatility,” Sterling Smith, a futures specialist at Citigroup Inc., said in a report e-mailed yesterday. “The noticeably weaker dollar was also seen as supportive, along with much better-than-expected volume.”
Raw sugar for delivery in October rose 0.1 percent to 17.03 cents a pound by 6:01 a.m. on ICE Futures U.S. in New York, after rallying 1.3 percent yesterday. Futures trading volumes were 37 percent higher than the average for the past 100 days for this time of day, according to data compiled by Bloomberg. White sugar for December delivery gained 0.6 percent to $488.50 a ton on NYSE Liffe in London. The October futures were at $497.10 a ton.
Sugar supplies will outpace demand by 2 million tons in the 2013-14 season that starts in October in most countries, estimates London-based Czarnikow Group Ltd., down from a previous forecast of 3.9 million tons. The global surplus will be smaller as lower prices mean demand is rising, said the company, which traded 2.4 million tons of raw sugar last year.
“The market should begin to encounter more selling at these elevated levels,” Chicago-based Smith said. Industry group Unica will update harvest estimates for Brazil’s center south region in the second half of August at 2 p.m. Sao Paulo time today.
Arabica coffee for December delivery gained 0.4 percent to $1.185 a pound on ICE. Robusta coffee for delivery in November was 0.2 percent higher at $1,762 a ton on NYSE Liffe.
Cocoa for December delivery fell 0.2 percent to $2,548 a ton in New York. Cocoa for December delivery slid 0.3 percent to 1,680 pounds ($2,639) a ton in London.
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