Sugar Climbs Most in Two Weeks in N.Y. on Demand Speculation

Sugar futures rose the most in almost two weeks on speculation that importers will follow Pakistan in boosting purchases, tightening global supplies.

Trading Corp. of Pakistan bought 50,000 metric tons of refined, or white, sugar from Singapore’s Agro Corp., paying $779.95 a ton, a spokesman said. Raw-sugar futures have fallen as much as 23 percent from a 29-year high of 30.4 cents a pound on Feb. 1.

“At current prices, we may see more buyers coming in,” said Hank King, the managing director of Trendphonic Futures Trading LLC in Chicago. “We should see consolidation.”

Raw-sugar futures for May delivery jumped 0.72 cent, or 3 percent, to 24.4 cents a pound on ICE Futures U.S. in New York, the biggest gain for a most-active contract since Feb. 11. Before today, the price dropped 8.8 percent this week.

Worldwide output of the sweetener is forecast to trail demand by 9.4 million metric tons in the 2009-2010 season, a wider deficit than the 7.3 million tons estimated earlier, according to the London-based International Sugar Organization.

Sugar prices will remain high “on the back of lower production,” James Easterbrook, a Johannesburg-based RMB Morgan Stanley equity analyst, said today in a report. “In recent discussions with colleagues in India and Brazil, it appears that the supply situation is likely to remain tight” near term.

Sugar prices doubled last year as adverse weather in Brazil and India, the world’s biggest producers, curbed sugar-cane crops. That sparked a rush for supplies by buyers in countries from Egypt to Mexico.

Pakistan will import 1.2 million tons to meet demand that has helped push prices to near a record. It plans to import 500,000 tons by June and another 700,000 tons by July.

By Debarati Roy
Source: Bloomberg