Sugar futures jump on global supply fears
Category: Sugar
(Forexpros) – Sugar futures were up for a second day on Wednesday, hovering close to a four-week high as growing concerns over a shortage in global supplies boosted prices.
On the ICE Futures U.S. Exchange, sugar futures for March delivery traded at USD0.2819 a pound during European morning trade, jumping 1.9%.
It earlier rose by as much as 2.05% to trade at USD0.2825 a pound, the highest price since October 17, when prices rose to a four-week high of USD0.2834 a pound.
The Committee of European Sugar Users, an industry group whose members include global food giants Nestle and Kraft Foods, said that European Union sugar supplies will fall 1.1 million tons short of demand in the 2011-12 marketing season.
In a report published earlier in the day, the industry group said that EU sugar stockpiles stood at 1.92 million tons as of the end of September and will probably decline to 1.24 million within a year.
Meanwhile, ongoing concerns over Thailand’s sugar harvest continued to buoy prices after the nation’s Office of Cane and Sugar said Monday that the Thai farmers were expected to delay the 2011-12 cane-crushing season by a few weeks to late November due to the worst floods in nearly 50 years.
Crushing had been expected to start by late October. Thailand is the world’s second largest sugar exporter after Brazil and has estimated its sugar cane output at 99.4 million tonnes in the 2011-12 season.
The downbeat forecast for global sugar supplies boosted speculation that importers will increase purchases of U.S. sugar.
A broadly weaker U.S. dollar also contributed to gains, as risk appetite was boosted by hopes that European leaders will make a breakthrough on tackling the euro zone’s debt crisis at this weekend’s European Union summit.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.49% to trade at 76.92.
A weaker dollar boosts the appeal of U.S. crops to overseas buyers and makes commodities more attractive as an alternative investment.
Elsewhere on the ICE Futures Exchange, cotton futures for December delivery shed 0.22% to trade at USD0.9995 a pound, while Arabica coffee for December delivery rallied 2.22% to trade at USD2.3568 a pound.
