Sugar Rebounds as Bets on Lower Prices Reach Record; Cocoa Rises
Sugar rebounded in London and New York on speculation supplies from top producer Brazil are tighter than initially anticipated just as speculators’ bets on lower prices climbed to a record. Coffee fell and cocoa gained.
Raw sugar from Brazil was offered for sale at the same price as the March futures on ICE Futures U.S., while buyers were looking to get a discount of 0.1 cent to the exchange price, according to Green Pool Commodity Specialists Pty. The discount narrowed 0.3 cent a pound from a week earlier, the Brisbane, Australia-based researcher said in an e-mailed report. Speculators held record bets on lower prices in the week ended Jan. 22, U.S. Commodity Futures Trading Commission data 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.
White, or refined, sugar for March delivery gained 0.7 percent to $490 a ton by 10:23 a.m. on NYSE Liffe in London, after dropping as much as 0.8 percent on Jan. 25. Raw sugar for March delivery was 0.8 percent higher at 18.52 cents a pound in New York. It closed 0.6 percent down in the previous trading session, after falling as much as 1.2 percent.
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, the Washington-based commission said in its Commitments of Traders report. Net-short positions were a record 90,249 contracts, up from 60,509 a week earlier. NYSE Liffe will update trader holdings later today.
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. 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 the 2012-13 season.
Robusta coffee for March delivery was down 0.3 percent to $1,954 a ton on NYSE Liffe. Arabica coffee for March delivery was little changed at $1.4835 a pound on ICE.
“The increasingly concerning roya fungus, or leaf rust, is forcing Central American origins to trim down production estimates for upcoming crops as well as invest significant amounts of money in an attempt to combat and eradicate it,” broker ABN Amro Markets (U.K.) Ltd. said in a report e-mailed today. “Fears are that the outbreak of roya could have longer term effects well into the 2013-14 season.” Central American nations produce mostly arabica beans.
Cocoa for March delivery was up 0.4 percent at 1,423 pounds ($2,240) a ton in London. Cocoa for March delivery was little changed at $2,171 a ton in New York.
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.