Jan. 11 (Bloomberg) -- Sugar resumed its decline in New York, after gaining as much as 1.4 percent yesterday, on speculation buying from index funds will soon end and supplies from top producer Brazil continue to increase. Cocoa fell.
Index funds were set to buy 31,451 contracts of raw sugar due to changes in weightings of commodities indexes this week, according to estimates by Morgan Stanley. Sugar output in Brazil’s main growing region climbed to 34.1 million metric tons for the 2012-13 season after most harvesting ended, Unica said yesterday. The industry group last month raised its forecast for sugar production from 32.7 million tons.
“It seems the short-term bull or fund reweighting story has fired a good proportion of its ammunition,” Thomas Kujawa, the co-head of soft commodities at Sucden Financial Ltd., a futures and options broker in London, said in a report e-mailed today. “Failure to close above 19 cents suggests the short-term fund story has been digested and the bulls need a new story.”
Raw sugar for March delivery retreated 0.4 percent to 18.89 cents a pound by 8:31 a.m. on ICE Futures U.S. in New York. White, or refined, sugar for March delivery slid 0.4 percent to $510.50 a ton on NYSE Liffe in London.
“In the medium term, we continue to expect a test of the recent low at 18.31 cents,” Kujawa said. In the short term, a break of 19 cents may well trigger a short covering rally to resistance around 19.40 cents to 19.50 cents, he said.
Arabica coffee for March delivery gained 0.8 percent to $1.509 a pound in New York. Robusta coffee for March delivery advanced 0.9 percent to $1,934 a ton in London.
“Robusta is gaining a slight support from lower stockpiles but volume is still very low,” Jerome Jourquin, the head of agricultural commodity derivatives at brokerage Aurel BGC in Paris, said by e-mail today. “Coffee traded down the past three months, reaching the targets on both arabica and robusta. January should be a month of consolidation.”
Cocoa for March delivery fell 0.6 percent to $2,256 a ton on ICE. Cocoa for March delivery was down 0.4 percent to 1,436 pounds ($2,319) 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.