Sugar and Coffee Climb in New York on Index Re-Balancing
Category: Sugar
(Businessweek) – Sugar and coffee climbed in New York on speculation investors may be buying the futures due to changes in commodity-index weightings. Cocoa also advanced.
Index funds probably will buy 31,451 contracts of raw sugar and 11,148 lots of arabica coffee as the Standard & Poor’s GSCI and Dow Jones-UBS Commodity Index re-balance, Morgan Stanley estimates. Changes to weightings start today, according to the bank. While the so-called soft commodities gained, the GSCI gauge of 24 raw materials declined as much as 0.2 percent as the U.S. dollar strengthened. A rising U.S. currency reduces the appeal of commodities as an alternative investment.
“Re-balancing of the S&P GSCI and DJ-UBS index will bring inflows to energy and softs,” Hussein Allidina, head of commodities research at Morgan Stanley in New York, said in a report e-mailed today. “We expect the process to bring inflows of $1.5 billion to the softs.”
Raw sugar for March delivery gained 0.9 percent to 19.02 cents a pound by 11:12 a.m. on ICE Futures U.S. in New York, the biggest gainer among the so-called soft commodities. Arabica coffee for March delivery rose 0.6 percent to $1.4825 a pound.
Investors probably will add 4,690 contracts of cotton and sell 199 lots of cocoa, Morgan Stanley estimates. Cotton for March delivery gained 0.3 percent to 75.25 cents a pound on ICE. Cocoa for March delivery advanced 0.2 percent to $2,225 a metric ton.
“While re-balancing will likely lead to some price action, if history is any guide, most of the impact is likely already priced,” Allidina said.
On NYSE Liffe in London, robusta coffee for March delivery gained 0.7 percent to $1,962 a ton, white sugar for March delivery rose 0.6 percent to $513.50 a ton and cocoa for March delivery fell 0.1 percent to 1,420 pounds ($2,280) a ton.
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.
