(Bloomberg) – Sugar gained the most in a week in New York after Brazil pledged to extend a currency intervention program, fueling speculation sales of the sweetener priced in U.S. dollars will decline. Coffee rose.
Brazil, the world’s leading sugar producer, will extend its program of currency swap sales and dollar loans into 2014, Alexandre Tombini, the central bank president, said yesterday, prompting the real to rally the most among emerging-market dollar counterparts. Gains in the real, which slid 14 percent this year, reduce the appeal of overseas sales in U.S. dollars.
“We had 11 sessions of sugar price drops as the harvest in the center south advanced and a higher dollar prompted sales,”Bruno Zaneti, a consultant at FCStone do Brasil, said by phone from Campinas today. “The real’s fortune seems to be changing after Tombini’s speech, and with technical indicators showing an oversold market, we are now seeing dome price support.”
Raw sugar for March delivery climbed 0.8 percent to 16.82 cents a pound by 6:05 a.m. on ICE Futures U.S. in New York, paring gains of as much as 0.9 percent, the biggest intraday advance for a most-active contract since Nov. 27. The sweetener fell for 11 consecutive sessions through Dec. 4. Refined, or white, sugar for delivery in the same month advanced 0.9 percent to $453.80 a metric ton on NYSE Liffe in London.
Tombini Speaks
Policy makers may act to mitigate volatility in local financial markets, Tombini said at an event in Sao Paulo. The central bank announced on Aug. 22 a $60 billion program of swaps and credit line auctions to prevent the real from weakening further and driving up the price of imports.
Sugar futures, down 14 percent in New York this year, are heading for a third annual decline, the longest slump in more than two decades. Global supplies will outpace demand by 4.73 million tons in the 2013-14 season started Oct. 1, a fourth year of surpluses, says the International Sugar Organization.
Surpluses are shrinking as consumption growth is returning to levels registered before the world financial crisis, according to Czarnikow Group Ltd. Demand for the sweetener will gain 2.5 percent this year, the biggest rate of growth since 2008, when global consumption advanced 3.5 percent, said Stephen Geldart, a senior analyst at the London-based company, which traded 2.4 million tons of raw sugar last year.
Cocoa for delivery in March advanced 1.2 percent to $2,786 a ton on ICE, with futures trading volumes 37 percent below the average for the past 100 days for the time of day, data compiled by Bloomberg showed. Cocoa for delivery in March rose 0.9 percent to 1,749 pounds ($2,860) a ton on NYSE Liffe.
Arabica coffee for delivery in March rose 0.8 percent to $1.0685 a pound in New York. Robusta coffee for delivery in January gained 0.7 percent to $1,697 a ton in London.
