(Businessweek) – Sugar fell to the lowest level since 2010 in New York as cane processing surged in leading producer Brazil and in Thailand, the world’s second-largest exporter. Cocoa retreated and arabica coffee advanced.
Sugar cane processing in Thailand was just above 100 million metric tons by May 15, up from about 98 million tons a year earlier, according to data from the Office of Cane and Sugar Board. In Brazil’s center south, the country’s main growing region, millers crushed 31.5 million tons of cane in the second half of April, compared with 9.4 million tons a year earlier, data from industry group Unica showed.
“The week kicked off with a higher than expected Brazilian sugarcane crush figure,” Christina McGlone, a strategist at Deutsche Bank AG, said in a report e-mailed today. Producers in Thailand still have the incentive to plant more, she said.
Raw sugar for delivery in July fell 0.3 percent to 16.90 cents a pound by 6:17 a.m. on ICE Futures U.S. in New York, the lowest since July 2010. Futures trading volume was 34 percent lower than the average for the past 100 days for this time of day, according to data compiled by Bloomberg.
In London, white, or refined, sugar for delivery in August was down 0.4 percent to $475.60 a ton on NYSE Liffe.
While Brazil said last month it will give tax breaks for mills in a bid to boost ethanol output, producers still directed 42 percent of all the cane processed to making sugar in the second half of April, up from 40.1 percent a year earlier, Unica data showed. Both sugar and ethanol are made from raw material sugar cane in the South American nation.
The cane allocation to sugar was larger than many had assumed, McGlone said. “This comes despite the price signal which should have encouraged a shift to ethanol.”
Ethanol Prices
The price of hydrous ethanol, the pure biofuel used in flex-fuel cars in Brazil, is set to drop relative to that of gasoline in the next week or two, prompting more consumption, according to a Deutsche Bank report e-mailed today. If hydrous ethanol falls to 60 percent the price of gasoline, that would mean a price of 16.5 cents a pound in sugar equivalent terms, the bank said.
Cocoa for July delivery slid 1.2 percent to $2,315 a ton in New York. Cocoa for delivery in July fell 1.2 percent to 1,547 pounds ($2,355) a ton in London.
Cocoa delivered against the expired May futures contract was 34,530 tons, NYSE Liffe said on its website today. That is lower than the 72,350 tons delivered when the March contract expired and compares with 44,010 tons in May last year.
Arabica coffee futures for July delivery gained 0.5 percent to $1.412 a pound on ICE. Robusta coffee futures for July delivery slid 0.3 percent to $2,047 a ton in London.
