Sugar, Coffee Climb on Index Rebalancing; Cocoa Rises

Sugar and coffee futures rose on speculation that investment funds tracking commodity indexes will increase their holdings. Cocoa and cotton also advanced, while orange juice dropped.

Investors will probably buy 31,451 contracts of raw sugar and 11,148 lots of arabica coffee as weightings shift for the Standard & Poor’s GSCI and Dow Jones-UBS Commodity gauges, Morgan Stanley estimates. That may bring inflows of $1.5 billion to the sugar, coffee, cocoa and cotton markets, the New York-based bank said today in a report.

As the weightings shift this month, “one would think we should at least see some stability” for prices, Michael McDougall, a senior vice president at Newedge Group in New York, said in a report.

Sugar for March delivery gained 0.1 percent to settle at 18.86 cents a pound at 2 p.m. on ICE Futures U.S. in New York, the first increase in three sessions. The price fell 16 percent last year.

Coffee futures for March delivery rose 2.1 percent to $1.504 a pound, the second straight gain.

Cocoa futures for March delivery jumped 2.1 percent to $2,267 a metric ton, the biggest increase for a most-active contract since Dec. 12.

Processing in Europe, the world’s top consuming region, probably fell 4 percent last quarter, according to the median estimate in a Bloomberg survey of 12 traders. That compares with declines of 16 percent in the third quarter and 18 percent in second. The European Cocoa Association will publish its latest figures on Jan. 15.

“People are buying ahead of the grinding numbers, which might show improvement,” Keith Flury, an analyst at Rabobank International in London, said in a telephone interview.

Cotton futures for March delivery climbed 0.9 percent to 75.71 cents a pound in New York.

Orange-juice futures for March delivery slumped 2.1 percent to $1.106 a pound. Earlier, the price touched $1.105, the lowest since Nov. 14.

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