LONDON: Raw sugar futures on ICE fell on Wednesday as geopolitical tensions between Russia and Ukraine kept investors at bay, though losses were limited by surging oil prices.

Rising energy prices tend to prompt cane mills in top producer Brazil to divert output from sugar to ethanol, a cane-based biofuel.

SUGAR

March raw sugar was down 1% to 18.6 cents per lb at 1335 GMT.

The dollar held below a 2-1/2 week high, with investors still keen to hold safe-haven assets. A strong dollar makes dollar-priced commodities like sugar costlier for non-U.S. investors.

Dealers said geopolitical tensions were driving down sugar, but countered that strong energy prices, also a result of the tensions, were offering it support.

They expect sugar to consolidate between 18.50 and 19.30 cents as a result.

Looking ahead, CovrigAnalytics said it expects the global sugar market to record a small surplus of less than 0.6 million tonnes in 2021 thanks to higher output in India, Thailand, Pakistan, Europe and Mexico.

March white sugar fell 0.8% to $500.20 a tonne.

COFFEE

March arabica coffee rose 1.2% to $2.4065 per lb, having gained 2.1% by the close on Tuesday.

“The arabica market has struggled to break through resistance of (circa) $2.50. But supply chain issues and a tight forward balance sheet should continue to support prices at (or) above $2.20 in the short term,” said Citi in a note.

Citi sees a small global coffee surplus of 1.1 million bags for 2022/23 but warned that recent excessive rains in key producers Brazil and Colombia could tighten the market balance going forward.

March robusta coffee rose 0.2% to $2,208 a tonne.

COCOA

March New York cocoa rose 0.8% to $2,524 a tonne.

Citi sees the global cocoa market recording a deficit of 85,000 in the current season as demand improves. The modest deficit should leave prices trading in the mid-$2,000 a tonne level.

“Generally speaking, cocoa markets seem to be near fair value here,” it said.

March London cocoa rose 0.7% to 1,703 pounds per tonne.