(Bloomberg) – Sugar rose to a six-week high in New York on concerns colder weather in leading producer Brazil could further damage this year’s crop. Cocoa declined.
Sugar cane areas in Brazil’s center-south, the country’s main producing region, will get colder weather this week, with temperatures falling Aug. 15, MDA Weather Services based in Gaithersburg, Maryland, said in an e-mailed report yesterday. Frost isn’t forecast, it said. Freezing temperatures last month damaged some of this year’s crop, according to Cepea, a University of Sao Paulo research group.
“The weather in Brazil has captured the sugar market’s attention again with forecasts for some rainy, cool weather in the upcoming period,” Judy Ganes-Chase, president of J. Ganes Consulting LLC, said in a report e-mailed yesterday. “This could cause some further disruptions to the harvest, but I don’t see it as a need to wave bull flags yet.”
Raw sugar for October delivery rose 0.5 percent to 17.24 cents a pound by 6:32 a.m. on ICE Futures U.S. in New York. The price gained to 17.29 cents a pound, the highest since June 27. White sugar for delivery in October climbed 1 percent to $505 a metric ton on NYSE Liffe in London.
“The frost reduces the yield of the sugar cane and so people might anticipate a reduction in output,” Julien Benichou, a broker at Starsupply Renewables SA, said by phone today from Nyon, Switzerland. “It’s not a massive issue.”
Money managers are betting on lower sugar prices. Large and small speculators excluding index funds were net-short by 78,724 contracts in the week ended Aug. 6, according to U.S. Commodity Futures Trading Commission data compiled by Bloomberg. They were betting on higher prices a year earlier.
Ethanol
“The speculative community remains fairly short and when we are above the 17 cents a pound mark, that strength is due to short-covering activity as we have more ethanol produced than sugar at the moment,” Benichou said, referring to the closing of bets on lower prices.
Cocoa for December delivery fell 0.9 percent to $2,476 a ton on ICE. Cocoa for September delivery fell 0.9 percent to 1,641 pounds ($2,536) a ton on NYSE Liffe. Prices gained 8.3 percent in New York last week on concerns dry weather will damage the next crop in Ivory Coast, the top producer.
“The cocoa market has a long history of having these volatile spikes on weather concerns and typically at the slightest hint of rain the market cascades quickly back down, sometimes posting losses at a faster speed than which it climbed,” Ganes-Chase said. “The dryness may delay the arrivals of the new crop, but it does not necessarily mean yet that production will be reduced.”
Arabica coffee for December delivery rose 0.2 percent to $1.2635 a pound in New York. Robusta coffee for delivery in November fell 1 percent to $1,936 a ton in London.
