Raw sugar climbs

Raw sugar hit six-week highs on Wednesday and white sugar 6-1/2 month peaks after a key industry forecast suggested Brazilian sugar and ethanol production was behind schedule. Arabica coffee fell almost 2 percent, nearing a one-month low after an US Department of Agriculture attache forecast placed Brazil's 2014/15 coffee crop at the high end of industry estimates.
Raw sugar's most-active July contract on ICE Futures US settled up 0.45 cents, or 2.5 percent, at 18.25 cents a lb. The session high was 18.28 cents, the highest since March 28. Combined with the rally of the past two sessions, the contract was up 6 percent on the week.
The latest run-up came after Tuesday's forecast by Brazil's sugar and ethanol industry association Unica, which said the country's sugar mills were behind last year's early production numbers despite dry weather that should have favoured crushing. Mills in Brazil's main centre-south cane region have produced 1.47 million tonnes of sugar through the end of April, down 13 percent from 1.70 million tonnes over the same period last year, Unica data showed.
"(The) UNICA report (has) combined with a good technical environment to produce a sharp rally," Sterling Smith, Citigroup's futures specialist for sugar, wrote in a commentary. Separately, the International Sugar Organisation on Tuesday forecast centre-south Brazilian cane output would fall to 575 million tonnes in 2014/15, from 597 million in 2013/14.
August white sugar on London's Liffe finished up $8.60, or 1.8 percent, at $494.40 a tonne. It rose as high as $494.80 during the session, a peak since October 29. In arabica coffee, July futures on ICE settled down 2.75 cents, or 1.5 percent, at $1.8420 per lb. The low for the day was $1.8295, not far from Monday's one-month bottom of $1.8275.
Arabica has fallen by around 17 percent since hitting a more than two-year high of $2.19 in April as the market learned of the possibility of less crop damage from Brazil drought's than initially feared. Forecasts for Brazil's coffee crop have varied widely from below 40 million 60-kg bags to around 51.5 million bags. A USDA attache report on Tuesday forecast Brazil will harvest 49.5 million bags, and that "a more precise number will be available only after the harvest." July robusta coffee on Liffe finished down $7, or 0.3 percent, at $2,091 a tonne. In cocoa, July futures on ICE fell $10, or 0.4 percent, to settle at $2,891 a tonne. July cocoa on Liffe slipped 1 pound to close at 1,812 pounds a tonne.