Sugar Falls to Lowest Since 2010 on India Subsidy; Cocoa Gains

January 16th, 2014

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Category: Cocoa, Sugar

(Bloomberg) – Sugar fell to the lowest level since 2010 in New York as India approved a plan to subsidize shipments of the raw variety to ease a domestic glut. Cocoa rose before the release of processing data in North America.

India’s government will give incentives for the world’s second-largest producer to export 4 million metric tons over two years, Food Minister K.V. Thomas told reporters in New Delhi after a meeting of ministers. The Food and Finance Ministries will work out details and the Cabinet may consider the proposals in its next meeting, he said.

“India’s plans to increase exports will bring more sugar into the market and further depress prices,” Sterling Smith, a futures specialist at Citigroup Inc. in Chicago, said in a report e-mailed yesterday. “A test of the 15-cents-a-pound area seems likely before the end of the week.”

Raw sugar for March delivery dropped 0.3 percent to 15.19 cents a pound by 6:10 a.m. on ICE Futures U.S. in New York. The price touched 15.10 cents, the lowest for a most active contract since June 21, 2010. Futures trading volumes were 4 percent higher 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 March fell 0.4 percent to $414.90 a ton on NYSE Liffe, after touching $414.40, the lowest for a most active contract since April 2009.

Sugar posted a third annual decline in New York last year, the longest slump in more than two decades. Supplies will be 4.73 million tons higher than demand in the 2013-14 season that started Oct. 1, estimates the International Sugar Organization in London. That’s a fourth year of surplus.

Indian Stockpiles

Stockpiles in India jumped to 8.85 million tons on Oct. 1, the highest in five years, according to the Indian Sugar Mills Association. Mills want to increase exports to trim record losses as cane costs climb and prices decline. Factories owed about 26 billion rupees ($422 million) in arrears to farmers as of Nov. 1, according to the mills association.

More shipments from India come at a time imports by China, the second-biggest buyer of the raw variety, are set to decline. Chinese raw sugar imports will probably fall 29 percent to 2.88 million tons in 2013-14, estimates Green Pool Commodity Specialists Pty. The premium Chinese futures command over prices in New York dropped to $407 a ton on Jan. 10, the lowest since November 2012, data compiled by Bloomberg showed.

Cocoa for delivery in March gained 0.3 percent to $2,757 a ton on ICE. Cocoa for delivery in the same month gained 0.3 percent to 1,771 pounds ($2,895) a ton on NYSE Liffe.

Bean processing in North America probably increased 4.1 percent in the fourth quarter as an improving economy spurred holiday demand, a Bloomberg survey of eight analysts published on Jan. 10 showed. The National Confectioners Association will release the official data at 4 p.m. in Washington.

Grindings in Europe gained 6.2 percent in the fourth quarter, data from the Brussels-based European Cocoa Association yesterday showed. In Malaysia, processing declined 9 percent in the period, according to the Malaysian Cocoa Board.

Arabica coffee for delivery in March rose 0.4 percent to $1.1765 a pound in New York. Robusta coffee for delivery in the same month gained 0.9 percent to $1,722 a ton in London.

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