Sugar Drops as Investors May Sell on India Outlook; Cocoa Rises

Sugar fell for a second day in New York on speculation investors who reduced bets on lower prices will start selling again as the outlook for the next crop improves in India, the second-biggest producer. Cocoa rose.

Large and small speculators excluding index funds reduced bearish bets on raw sugar traded in New York by 89 percent in the week ended Sept. 10, according to U.S. Commodity Futures Trading Commission data compiled by Bloomberg. Indian output will climb to 25 million metric tons in the 12 months starting Oct. 1, 5.5 percent above a previous forecast, the Indian Sugar Mills Association said today, helped by higher monsoon rainfall.

“The bulls would say this proves that the managed funds have now lost all faith in the bear trend and have calmly climbed aboard the bullish train which is going to take the market slowly but inexorably higher,” Robin Shaw, an analyst at futures and options broker Marex Spectron Group in London, said in a report. “The bears would say these funds now have massive ammunition to short the market again, once it has raised its head high enough above the parapet.”

Raw sugar for delivery in March slid 0.6 percent to 17.58 cents a pound by 5:54 a.m. on ICE Futures U.S. in New York, paring last week’s 5.3 percent gain. Refined, or white, sugar for delivery in December fell 0.8 percent to $488.20 a ton on NSYE Liffe in London.

Exchange Rates

Large and small speculators excluding index funds were net short, or betting on lower prices, by 6,906 contracts as of Sept. 10, CFTC data showed, down from 64,560 contracts a week earlier. Sugar’s gains were last week mostly “neutralized” by a stronger Brazilian real, Arnaldo Luiz Correa, a partner at Archer Consulting in Sao Paulo, said in a weekly report e-mailed on Sept. 14. Brazil is the world’s biggest sugar producer.

NYSE Liffe will today publish the delivery against the October white-sugar contract that expired last week. The delivery will be “massive” at 6,263 lots, according to Marex Spectron, equating to 313,150 tons. The delivered sweetener will come from Brazil, Guatemala, India and Mexico, Naim Beydoun, a broker at Swiss Sugar Brokers, said in a Sept. 15 report.

Cocoa for delivery in December rose 1.1 percent to $2,629 a ton in New York after reaching $2,637, the highest since Sept. 17, 2012. Cocoa for the same delivery month gained 0.4 percent to 1,705 pounds ($2,716) a ton in London.

Arabica coffee for delivery in December added 0.5 percent to $1.2065 a pound on ICE. Robusta coffee for delivery in November was unchanged at $1,747 a ton on NYSE Liffe.

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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