Sugar Futures Rise on Speculation Importers Will Purchase More

Sugar futures gained the most in almost two weeks on speculation that importers will increase purchases.

The Philippines will auction rights to import 100,000 tons of the sweetener tariff-free over the next two weeks, Bernardo Trebol, the nation’s sugar regulatory administrator, said on June 17. Also, Egypt may buy at least 50,000 metric tons of raw sugar, according to a state-owned company.

“Global demand is strong, and the evidence can be seen at the Brazilian ports where volumes to be shipped out are on the rise,” said Michael McDougal, a senior vice president at brokerage Newedge USA in New York.

Raw sugar for October delivery climbed 0.58 cent, or 3.8 percent, to 15.96 cents a pound on ICE Futures U.S. in New York, the biggest gain for a most-active contract since June 8. Prices are up more than 12 percent this month, heading for the first rally since January.

On London’s Liffe exchange, white-sugar futures for October delivery advanced $13.40, or 3 percent, to $467.80 a metric ton, also the biggest gain since June 8.

“The market is tight,” Naim Beydoun, of Rolle, Switzerland-based Swiss Sugar Brokers, wrote in a report dated today. “Supply will keep replenishing the pipelines as long as market values remain in the vicinity of profit-producing levels, for the time being 14 to 16 cents for New York and $460 to $490 for London.”

Tight Supplies

A surplus in the year starting Oct. 1 is “unlikely to be sufficient to rebuild supply pipelines,” Czarnikow Group Ltd. said in a report this month. Two years of demand exceeding production reduced stockpiles by 27 million tons, the broker said.

Cane output in Brazil’s Center South, the world’s largest producing region, may be lower than previously estimated because dry weather is hindering crop development, a domestic industry association, known as Unica, said today.

In March, Unica said the region would produce 595.9 million tons of sugar cane this year, up from 541.5 million tons last year. The association will release a revised estimate in coming months.

Sugar futures more than doubled last year as adverse weather reduced output in Brazil and India, the biggest producers.

Debarati Roy
M. Shankar
Bloomberg