Bloomberg News

Raw Sugar Falls in as Goldman Cuts Price Forecast; Cocoa Rises

January 14, 2013

Sugar fell in New York as Goldman Sachs Group Inc. (GS:US) cut the sweetener’s price forecast for the next three, six and 12 months on ample global supply. Cocoa rose.

Raw sugar traded on ICE Futures U.S. in New York will be at 18.50 cents a pound in three and six months, down from a previous estimate of 22 cents, Damien Courvalin, an analyst at the bank in the city, said in a report dated yesterday. Sugar, which slid 16 percent last year, will be at 19 cents a pound in 12 months, according to the bank’s forecast.

“Going forward, we expect the global sugar market to remain in a surplus for the third consecutive year in 2013-14,” said Courvalin. “We expect a further build in global inventories.”

Raw sugar for March delivery retreated 0.6 percent to 19.06 cents a pound by 6:04 a.m. in New York. The price gained as much as 1.2 percent in the previous trading session on Jan. 11. White, or refined, sugar for March delivery slid 0.4 percent to $512.90 a metric ton on NYSE Liffe in London.

Sugarcane in Brazil’s center south, the main growing region of the world’s biggest producer, will keep expanding as farmers continue to plant and because of “favorable” weather, according to Goldman Sachs. The crop will climb to as much as 590 million metric tons in 2013-14 from 535.7 million tons in 2012-13, Datagro Ltd. forecasts.

“This larger harvest will most likely allow for both an increase in sugar and ethanol production,” Courvalin said. Both ethanol and sugar are made from sugar cane in Brazil.

Cocoa for March delivery gained 0.2 percent to $2,260 a ton on ICE. Cocoa for March delivery was up 0.4 percent to 1,444 pounds ($2,326) a ton on NYSE Liffe.

Cocoa Consumption

Global cocoa consumption will exceed output by about 100,000 tons in the season that started in October after two years of oversupply, according to Goldman Sachs. Output was 90,000 tons higher than demand in the 2011-12 season after a record surplus of 341,000 tons a year earlier, according to the International Cocoa Organization in London.

Arabica coffee for March delivery rose 0.7 percent to $1.5435 a pound in New York. Robusta for March delivery advanced 0.9 percent to $1,962 a ton in London.

“We see limited further downside to prices and expect coffee prices to remain rangebound near-term before recovering modestly in 2013,” Courvalin said, commenting on arabica beans.

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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