White sugar futures leaped climbed on Thursday as talk swirled that the cane crop of No. 1 producer Brazil will be smaller than previously thought as aging plants and poor weather damage the harvest. London's October white sugar futures climbed $25.50 or by 3.4 percent to end at $781.30 a tonne.
"Little crops tend to shrink," Country Hedging Inc senior analyst Sterling Smith said. "I think that's the No. 1 factor here." "It's all coming down to the Brazilian crop. There are new private forecasts coming out suggesting (sugar) output may even be lower than the Unica numbers are forecasting," said Keith Flury, senior commodity analyst with Rabobank.
Last week, Brazil's sugar industry group Unica cut its forecast for center-south sugar output to 32.4 million tonnes, from a forecast in March of 34.6 million. "Figures like 31 million tonnes of sugar seem to be jumping around the market," Flury said of centre-south output.
Brazil's cane sector will fail to achieve a badly needed rise in output until at least 2013 as aging plants produce less and newly planted areas take time to mature, a senior industry analyst told Reuters.
Dealers noted that sugar crops in India, the world's second- largest producer and top consumer, received favourable monsoon rains in the past week.
But Smith said "more rains are needed to benefit" India's sugar crop and since rains were below average last week, the pace of the monsoon can easily turn erratic in the South Asian nation. Another factor, which bears watching, Smith says, is the heat wave that has baked the middle of the United States. The excessive heat has hit beet growing areas in Minnesota and the Dakotas, the biggest source of locally grown sugar in the country. Liffe's September cocoa futures shed 20 pounds to close at 1,970 pounds a tonne. Liffe's September robusta futures sank $108 or by 5.1 percent to finish at $2,002 a tonne.
Comments
Comments are closed.