Sugar Extends Drop to Three-Year Low on Surplus; Arabica Climbs

Dec 18, 2013 7:46 am ET

Dec. 18 (Bloomberg) -- Sugar extended declines to the lowest in three years in New York and London as harvests advanced in top producer Brazil as well as India and Thailand, boosting oversupply. Arabica coffee climbed as robusta fell.

The global sugar surplus will be 8.3 percent bigger than previously forecast in the 2013-14 season that starts in October in most countries, Green Pool Commodity Specialists Pty. forecast. Supplies will be 5.05 million metric tons bigger than demand as output expands in Brazil and Thailand, the second- biggest exporter, the researcher said on Dec. 13. That compares with a previous estimate of 4.66 million tons.

“Bearish sentiment continued to prevail in the sugar market in early December and there is little indication that this may still change any time soon,” Ratzeburg, Germany-based F.O. Licht GmbH said in a report dated yesterday. “Over the medium term, however, sugar remains vulnerable to additional losses due to an oversupplied world market.”

White, or refined, sugar for delivery in March fell 0.4 percent to $434.10 a ton by 12:18 p.m. on NYSE Liffe in London. The price slid as much as 0.8 percent to $432.50 a ton, the lowest for a most-active contract since May 7, 2010. Raw sugar for delivery in March dropped 0.1 percent to 15.95 cents a pound on ICE Futures U.S. in New York, after touching 15.86 cents a pound, the lowest since July 2010.

“Little seems to have changed fundamentally,” Tom Kujawa, co-head of soft-commodities at London-based futures and options brokerage Sucden Financial Ltd., said in a report e-mailed today. “The market consensus essentially reflects the perceived, expected or predicted surplus year and particularly pressured in the coming the second quarter.”

Cocoa for delivery in March fell 0.3 percent to 1,779 ($2,910) a ton in London. Futures for delivery the same month climbed 0.3 percent to $2,780 a ton in New York.

“The return of seasonal Harmattan winds to West Africa has raised fears of a slump in cocoa deliveries in January and low quality mid-crop beans,” Lome, Togo-based lender Ecobank Transnational Inc. said in a report dated yesterday.

Cocoa deliveries to ports in top grower Ivory Coast were 43 percent higher from the start of the season on Oct. 1 to Dec. 15, data from KnowledgeCharts, a unit of Commodities Risk Analysis, show. The surge in arrivals is the result of “good weather” and traders are stocking up to try to avoid a potential supply crunch in January, Ecobank said.

Robusta coffee for March delivery dropped 0.6 percent to $1,706 a ton on NYSE Liffe. Arabica coffee for delivery in March gained 0.7 percent to $1.1149 a pound on ICE.

--Editors: Claudia Carpenter, John Deane