Sugar Rises as Producers May Switch to Ethanol; Coffee Advances
November 28, 2011, 8:40 AM ESTBy Isis Almeida
Nov. 28 (Bloomberg) -- Sugar climbed in New York, after falling for three consecutive sessions, on speculation lower prices may spur demand and producers in top global grower Brazil may switch to ethanol production. Coffee advanced.
Millers in Brazil may use their sugar cane to produce ethanol at the expense of sugar if prices fall too far, according to Macquarie Group Ltd. At present, sugar prices below 21 cents a pound would encourage millers to turn to the biofuel, analyst Kona Haque said in a report dated Nov. 24. Demand has started to pick up due to lower prices, Swiss Sugar Brokers said in a report e-mailed yesterday.
“It could be too early to get too much bearish from actual levels,” Naim Beydoun, a broker at the Rolle, Switzerland-based Swiss Sugar Brokers, wrote in the report. He added that Brazilian producers may buy sugar back at 22 cents a pound or switch to ethanol at 20 cents a pound.
Raw sugar for March delivery advanced 1.2 percent to 23.17 cents a pound by 8:13 a.m. on ICE Futures U.S. in New York. White, or refined, sugar for March delivery climbed 0.8 percent to $603 a metric ton on NYSE Liffe in London.
Sugar has fallen 28 percent in New York this year. The premium buyers are prepared to pay for raw sugar from Brazil for loading next month at ports in the Center South, the main producing region, fell to 0.5 cent a pound to the March contract on ICE, data from Santos, Brazil-based broker and consultant SA Commodities show. That compares with 0.65 cent on Nov. 22, according to the figures. Lower prices and falling premiums may spur demand, Swiss Sugar Brokers’ Beydoun said.
“Buyers are surfacing on raw and on white sugar,” he said in the report, adding that refiners bought more last week and private traders in Egypt were looking to purchase.
Arabica coffee for March delivery was up 1.4 percent to $2.3585 a pound in New York. Robusta coffee for January delivery rose 3.7 percent to $1,960 a ton in London.
Cocoa for March delivery advanced 1.1 percent to $2,407 a ton on ICE. Cocoa for December delivery rose 0.2 percent to 1,512 pounds ($2,352) a ton on NYSE Liffe.
--Editors: Sharon Lindores, Dan Weeks
To contact the reporter on this story: Isis Almeida in London at Ialmeida3@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at Ccarpenter2@bloomberg.net.
