Sugar Gains on Expectations of Delays in Brazilian Harvest

(Wall Street Journal) – Sugar prices jumped Monday, with brokers citing reports that major sugar producers in Brazil would delay the beginning of their cane harvest by as much as two weeks, potentially giving an already oversaturated market some breathing room.

Raw sugar for May delivery rose as much as 1.4% to 13.01 cents a pound on the ICE Futures U.S. exchange. Sugar prices have been in a prolonged tailspin since their recent peak last June, falling more than 30%, though prices have begun to recover more recently.

Brazil is the world’s largest producer and exporter of sugar. Its harvest usually begins in mid-April, but brokers said recent rains could mean the sugar cane stays in the fields for longer.

“Bigger groups in Brazil have said they will delay the start of their harvest for 10 to 15 days,” said Mike McDougall, a senior vice president at futures brokerage Newedge in New York. “If it’s a larger crop, they can wait for the crop to mature a bit better.”

The traders’ expectations outweighed forecasts by Brazil’s crop agency, released Monday, that growers would produce 37.4 million tons of sugar in the coming harvest, up 5% from the previous year. The sugar cane harvest is likely to reach 654.6 million metric tons, an increase of 3.1% from the previous year.

Joe Ricupero, a vice president at brokerage RJ O’Brien in New York, said the market was also helped by traders buying futures to close out bearish bets and move positions forward in the market.

In other softs markets, July cocoa gained 0.3% to $2,791 a ton, May arabica coffee rose 1.5% to $1.3715 a pound, and May cotton climbed 0.8% to 65.58 cents a pound. Frozen, concentrated orange juice for May extended losses, down 1.2% to $1.1125 a pound, the lowest since March 20.