White sugar slips as supply glut looms, buyers retreat

White sugar futures fell on Tuesday, with the spot premium over raw sugar slipping to its lowest in more than 2-1/2 years on signs of ample global supply ahead, while arabica coffee climbed as charts improved. October white sugar was down $7.40, or 2 percent, at $369.60 a tonne by 1419 GMT, having hit a session low of $368.50.
The premium for spot white sugar over the equivalent raws contract fell below $55 per tonne, the lowest on a continuation chart since February 2015. Earlier this year, it surged above $115 per tonne. "This does not suggest a tightness nearby and with new crop EU becoming tenderable against the December does not bode well for the whites prices going forward," said Nick Penney, senior trader at Sucden Financial.
The whites market has been pressured by expectations of a global supply glut, as the European Union inches closer to ending production quotas in October. Participants were also monitoring Pakistan, where the sugar industry is urging the government to reinstate export subsidies, amid a domestic surplus just as the country prepares to harvest a record crop.
October raw sugar was unchanged at 14.29 cents per lb, recouping earlier losses. Prices were somewhat supported by data from Brazil's Unica, which showed the key centre-south region crushed a lower-than-expected 38.912 million tonnes of cane in the second half of August.
Mills allocated 46 percent of cane to sugar, compared to an average of 50 percent over the last two months. Sugar production was at 2.536 million tonnes. "Ethanol demand has picked up a bit," a dealer said. "And there were a couple of days of rain so the crush dropped a bit."
An S&P Global Platts survey of analysts had forecast a crush of 41.95 million tonnes, with mills allocating 48.1 percent to sugar and producing 2.823 million tonnes of sugar. December arabica rose 2.15 cents, or 1.6 percent, to $1.34 per lb.
The market was supported by technical buying on the back of more positive chart signals, after prices climbed above key resistance levels, dealers said. November robusta coffee rose $5, or 0.3 percent, to $1,956 a tonne. December New York cocoa rose $11, or 0.6 percent, to $1,945 a tonne. December London cocoa was down 2 pounds, or 0.1 percent, at 1,474 pounds a tonne.