Bloomberg News

Sugar Falls to Two-Week Low on Surplus; Coffee and Cocoa Slide

January 04, 2013

Sugar fell to the lowest level in more than two weeks in London amid a third consecutive year of surpluses. Cocoa and coffee retreated as commodities slid.

Sugar supplies will be 6.2 million metric tons higher than demand in the 2012-13 season started in October, according to the International Sugar Organization. That’s a third year of excess supplies. Commodities declined as the dollar rose after U.S. Federal Reserve policy makers said they may cut cash infusions this year. A higher dollar reduces the appeal of raw materials priced in the U.S. currency.

“The market can be expected to remain under pressure,” German researcher F.O. Licht GmbH said in a report dated yesterday. There are “ample global supplies,” it said.

White, or refined, sugar for March delivery slid 0.6 percent to $511.60 a ton by 9:48 a.m. on NYSE Liffe in London. Earlier, the price touched $510 a ton, the lowest since Dec. 20. Raw sugar for March delivery fell 1 percent to 18.91 cents a pound on ICE Futures U.S. in New York.

Fed board members said they will probably end their $85 billion monthly bond purchases in 2013, according to minutes of their Dec. 11-12 meeting released yesterday. The Standard & Poor’s GSCI index of 24 commodities fell as much as 0.9 percent. Raw sugar fell 27 percent in 2011, the most in a decade, and 16 percent last year on excess supplies globally.

Robusta coffee for March delivery slid 1 percent to $1,926 a ton in London. Arabica coffee for March delivery fell 0.9 percent to $1.4515 a pound in New York.

“We are still seeing a daily increase in the certs and lots of coffee at origin,” London-based broker Sucden Financial Ltd. said in a report e-mailed yesterday. Certs are exchange- certified stockpiles of arabica beans, last year’s worst performing commodity. “As a result, this downtrend may still have a little more to say in the early part of this year.”

Cocoa for March delivery was 0.5 percent lower at 1,426 pounds ($2,287) a ton on NYSE Liffe. Cocoa for March delivery fell 1.3 percent to $2,227 a ton on ICE.

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.


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