LONDON: Raw sugar futures on ICE rose on Friday as oil prices gained and traders digested data showing worse-than-expected output in top producer Brazil.
Strong energy prices tend to prompt cane mills in Brazil to produce less sugar and more ethanol, a cane-based biofuel.
SUGAR
May raw sugar, which expires on Friday, was up 0.6% to 19.53 cents per lb at 1417 GMT, having hit its lowest price since March 18 at 18.80 cents on Wednesday.
Cane crushing in Brazil’s center-south region fell 66.9% in the first half of April versus a year ago, sharply below market expectations.
With the Brazilian harvest starting slowly, dealers said the market looks to be well supported until more data becomes available.
Looking further ahead, analyst Greenpool said a global sugar surplus of 1.41 million tonnes is now expected in the 2022/23 season.
August white sugar rose 0.7% to $531.10 a tonne.
COFFEE
July arabica coffee gained 2.7% to $2.2365 per lb, having hit the lowest level since March 30 at $2.1455 on Wednesday.
Dealers said exporters in top producer Brazil have been reticent to sell, even in the face of a weakening Brazilian currency. A weak real usually prompts selling because it raises returns in local currency terms.
On the downside, Citi said it has again cut its coffee demand outlook by 0.5 million bags due to the impact of the Russia-Ukraine war and the COVID lockdown in Shanghai.
July robusta coffee rose 1% to $2,109 a tonne.
Coffee exports from top robusta producer Vietnam are expected to increase 28.4% in the first four months of this year, the General Statistics Office said.
COCOA
July New York cocoa rose 0.5% to $2,579 a tonne, recovering some ground after Tuesday’s fall to an eight-week low of $2,478.
“Softer-than-expected first quarter cocoa grindings, amid the Russia/Ukraine conflict and China lockdowns, are weighing. That said, 2021/22 cocoa balances remain in deficit given the substantial short-crop in Ghana,” Citi said in its latest monthly report.
It said prices, which have declined over the past month from $2,700 to $2,500 a tonne, should find support around current levels.
July London cocoa rose 0.3% to 1,815 pounds per tonne.