White sugar hits record high on strong demand
London, January 7, 2010
White sugar futures hit a record high for a seventh straight trading session on Thursday and dealers predicted further rises through $750 a tonne soon driven by increasing import demand by top consumer India.
Raw sugar nudged close to a 29-year high on prospects for strong demand by key markets, including Indonesia, Egypt and Pakistan.
"The amount of pent-up import demand out there suggests there's not enough sugar to go around," said Kona Haque, commodity strategist with Macquarie Bank.
While sugar's market fundamentals countered pressure from the stronger dollar, the currency dragged ICE cocoa and coffee futures lower, dealers said.
Strength in the dollar cuts soft commodities' appeal as an asset and makes dollar-priced commodities more expensive for holders of other currencies.
White sugar futures edged up to a record high shortly after the opening, and seemed set for further rises.
"The market is not likely to loosen before May, when we will see (new crop) sugar coming out of Brazil," Haque said.
Mills in top producer Brazil are still crushing cane from the 2009/10 season despite wet weather and low yields, amid expectations of another global deficit and low stocks.
Haque predicted that benchmark white sugar futures would soon break above $750 per tonne and raws would exceed 30 cents a lb, supported by the market fundamentals.
London (Liffe) benchmark white sugar futures surged 123 per cent in 2009, and raws jumped 128 per cent.
Liffe March white sugar hit a record high of $742.90 a tonne and later pulled back slightly to stand at $739.90, up $8.50 or 1.16 per cent, in modest volume of 1,148 lots at 1118 GMT.
ICE March raw sugar was up 0.05 cent or 0.18 per cent to 28.46 cents a lb, not far shy of Tuesday's 29-year high of 28.90 cents a lb.
Dealers focused on a sugar import ban in India's Uttar Pradesh state, a key sugar producing area, saying that as substantial raw sugar was locked up in ports, more white sugar imports were inevitable.
A European broker referred to talk that the Uttar Pradesh ban could be lifted on Thursday, but there was no immediate confirmation.
ICE cocoa and coffee futures fell on light investor selling pressured by the stronger dollar, traders said.
"There's always a U.S. dollar impact on softs," Haque said.
"Softs are always seen as a hedge against the dollar." Previous talk of a sharp winding down of the main cocoa crop in top producer Ivory Coast appeared to be over-stated.
"So far we're not seeing a rapid tail-off," Haque said.
However, broker Sucden said it saw potential for further cocoa price rises.
"Signs for a drive northwards still remain on Liffe, at least with the path of least resistance continuing in our view to be to the upside," Sucden said in a daily market report.
Cocoa arrivals at ports in top grower Ivory Coast reached 565,122 tonnes in the season to December 27, up from 515,678 tonnes in the same period a year ago, according to data from the Coffee and Cocoa Bourse (BCC) obtained by Reuters.
ICE March cocoa futures fell $15 or 0.46 per cent to $3,277 per tonne, while Liffe May cocoa was down 1 pound or 0.07 per cent to 1,380 pounds per tonne in light volume of 1,053 lots.
In coffee, dealers said tight market conditions underpinned futures prices, due to quality concerns and Brazilian government purchases from local growers under an options scheme.
March arabicas fell 0.6 cent or 0.42 per cent to $1.41 per lb.
Robusta coffee futures on Liffe edged down with March falling $1 at $1,380 a tonne in slim turnover of 1,053 lots. – Reuters
More Miscellaneous Stories
- Diamond to launch UK café brand in UAE
- Mideast super-rich's wealth surges to $354bn
- Focus on anti-trafficking co-operation
- 300 brands on show at Saudi Foodex
- Bridge project at US base to be ready soon
- DuPont in sustainability goals success
- Abu Dhabi Police, Royal Jet ink agreement
- Jotun opens warehouse in Dammam
- RAK Ceramics deploys top SAP software
- GCAA warns on helium balloon dangers