Dec. 20 (Bloomberg) -- Investors should buy raw sugar futures for May delivery traded in New York as prices may rise on “supply slippages” and production costs in Brazil, the biggest producer, according to Standard Chartered Plc.
The cost of production in Brazil is about 22 cents a pound, close to the market price, the bank said in a report e-mailed today. Prices have dropped 28 percent this year, likely discouraging cane planting in Brazil and India, the second- largest grower and biggest consumer, Standard Chartered said.
The May futures contract may climb to 28 cents a pound, and investors should sell if it falls to 18 cents a pound, Abah Ofon, an analyst at the bank, wrote in the report.
More plantings will be needed to encourage output and to boost “still-anemic” inventories, according to the bank. The May futures contract rose 0.4 percent to 22.84 cents a pound by 8:04 a.m. on ICE Futures U.S. in New York.
--Editors: Claudia Carpenter, Sharon Lindores
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.