Sugar Climbs as Bets on Lower Prices Reach Record; Coffee Falls

Sugar rose for the first time in three days in New York and London on speculation any supply disruption will be enough to fuel a rally with speculators holding record bets on lower prices. Coffee declined.

Large and small speculators excluding index funds boosted their net-short position, or bets on lower prices, by 49 percent in the week ended Jan. 22, U.S. Commodity Futures Trading Commission data compiled by Bloomberg showed. In London, money managers held a record net-short position of 8,762 contracts, NYSE Liffe data reported today showed.

“The new fund record could cause another knee jerk reaction to the upside,” Michael McDougall, head of the Brazil desk at Newedge Group in New York, said by e-mail on Jan. 25.

Raw sugar for March delivery climbed 0.9 percent to 18.54 cents a pound by 8:15 a.m. on ICE in New York. White, or refined, sugar for March delivery gained 0.6 percent to $489.20 a metric ton on Liffe in London.

Raw sugar from Brazil was offered for sale at the same price as the March futures on ICE Futures U.S., according to Green Pool Commodity Specialists Pty. Buyers were looking to get a discount of 0.1 cent to the exchange price, down 0.3 cent from a week earlier, the Brisbane, Australia-based researcher said in an e-mailed report.

A “slightly surprising” tight sugar availability in Brazil is making it less likely that sweetener from the South American nation will be delivered when the New York March contract expires on Feb. 28, Paul Bannister, head of sugar brokerage at Marex Spectron Group in New York, said in a report e-mailed today.

Sugar Imports

The market will be “roughly balanced” in the period to the expiration as India and China have been importing the commodity, he said. The International Sugar Organization in London has forecast a third year of surplus in 2012-13.

Trading in raw sugar was 58 percent above the 100-day average for this time of the day, data on Bloomberg showed.

“The open interest has increased recently, as well as the spec short, and we suspect the generally lower prices have brought in end destinations pricing physical,” Thomas Kujawa, the co-head of soft commodities at Sucden Financial Ltd. in London, said in a report e-mailed today. “Perhaps then with physical off take and the generally low flat price it seems the funds won’t get their way.”

Arabica coffee for March delivery fell 0.2 percent to $1.48 a pound on ICE. Robusta coffee for March delivery was down 0.5 percent to $1,949 a ton on NYSE Liffe.

Cocoa for March delivery dropped 0.1 percent to $2,171 a ton in New York. Cocoa for March delivery was up 0.4 percent at 1,422 pounds ($2,237) a ton in London.

Before it's here, it's on the Bloomberg Terminal.