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Sugar Advances as Bets on Lower Price Spur Buying; Cocoa Falls

Sugar rose to the highest in more than a week in New York as lower prices may spur buying after investors boosted bets on falling prices. Cocoa fell.

Large and small investors excluding index funds were net-short, or betting on lower prices, by a record 76,700 contracts in the week ended Dec. 11, data from the U.S. Commodity Futures Trading Commission showed. Sugar declined 18 percent this year as supplies will outpace demand for a third year in 2012-13.

“The report has to be considered bullish,” Michael McDougall, head of the Brazil desk at Newedge Group in New York, said by e-mail on Dec. 14, referring to trader holdings data released after the market close that day. “I don’t think anyone was expecting the old record to be comprehensively blown out.”

Raw sugar for March delivery gained 0.8 percent to 19.16 cents a pound by 7:46 a.m. on ICE Futures U.S. in New York. It reached 19.30 cents in earlier trading, the highest since Dec. 7. White, or refined, sugar for March delivery rose 0.8 percent at $512.70 a ton on NYSE Liffe in London. It’s lost 15 percent this year.

“The index funds increased their gross long by almost 10,000 lots, presumably because the market had fallen low enough to attract value buying or low enough relative to other commodities,” McDougall said.

Index funds are set to buy another 30,000 futures in early to mid-January as the Dow Jones-UBS Commodity Index and the Standard & Poor’s GSCI gauge make their annual changes to weightings of raw materials, Paul Bannister, head of sugar brokerage at Marex Spectron Group, said in a report today.

Sugar Output

The sugar surplus will be 5.1 million tons in 2012-13 due partly to a stronger-than-forecast output in Brazil, according to Barclays Plc. Sugar output in the country’s main growing region will near 34 million tons, Marex Spectron estimates. That compares with 31.3 million tons in 2011-12.

Cocoa for March delivery was little changed at $2,434 a ton on ICE. The chocolate ingredient has gained 15 percent this year. Cocoa for March delivery fell 0.7 percent to 1,535 pounds ($2,488) a ton on NYSE Liffe, still up 11 percent this year.

Arabica coffee for March delivery was up 0.3 percent to $1.436 a pound in New York. It’s fallen 37 percent this year. Robusta coffee for March delivery retreated 0.2 percent to $1,869 a ton in London, still 3 percent higher this year.

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