Sept. 25 (Bloomberg) -- Sugar rallied to the highest in six months after production declined in Brazil, the world’s largest producer and exporter. Cotton and orange juice also rose, while cocoa and coffee fell.
Sugar production in Brazil’s Center South, the main growing region, fell 5.6 percent to 2.96 million metric tons in the first half of September from a year earlier, as yields declined and millers used more cane to make ethanol than the sweetener, Unica, a Sao Paulo-based industry group, said yesterday. Rain this week in Sao Paulo, Brazil’s biggest cane-growing state, will hinder the current harvest and may reduce yields, Somar Meteorologia said Sept. 23.
“The crush and sugar production were at the low end of the expectation,” Michael McDougall, the head of the Brazil desk at brokerage Newedge USA LLC in New York, wrote in a report. “More worrying is the continuing underperformance of the industrial yield.”
Raw sugar for March delivery jumped 1.5 percent to settle at 18.19 cents a pound at 2 p.m. on ICE Futures U.S. in New York, after reaching 18.22 cents, the highest for a most-active contract since March 25.
The gains will probably be capped at 18.5 cents, as suppliers from India and Thailand, the second-largest shipper, will seek to take advantage of the higher prices, Sterling Smith, a futures specialist at Citigroup Inc. in Chicago, said in a telephone interview.
Cotton futures for December delivery rose 0.3 percent to 84.65 cents a pound on ICE.
Orange-juice futures for November delivery advanced 2.2 percent to $1.3045 a pound.
Cocoa futures for December delivery retreated 1.2 percent to $2,573 a metric ton, the biggest decline since Aug. 30.
In the next 10 days, normal rains in Ivory Coast, the biggest producer, will boost crops that were hurt by dryness in recent months, according World Weather Inc. in Overland Park, Kansas.
Arabica-coffee futures for December delivery slid 0.5 percent $1.1725 a pound on ICE.
--With assistance from Dominic carey in Sao Paulo. Editors: Thomas Galatola, Millie Munshi