Bloomberg News

Sugar Declines to 2 1/2-Year Low as Stockpiling May End

January 22, 2013

Sugar fell to the lowest level in more than 2 1/2 years in London as imports may decline after consuming countries re-built stockpiles. Cocoa slid.

China imported about 270,000 metric tons of sugar last month, data from Beijing-based customs on Bloomberg showed. That was down from about 490,000 tons in the same period a year earlier. Chinese sugar imports are set to drop to 2 million tons in 2012-13 from 4.2 million tons a year earlier, according to the U.S. Department of Agriculture. Russian imports will be 900,000 tons in 2012-13, up from 750,000 tons in 2011-12 while still down from 2.5 million tons in 2010-11, when the nation was the world’s largest raw sugar buyer, the data showed.

“Now that stocks have been rebuilt, producers are beginning to ask who will buy their sugar in 2013,” Jonathan Kingsman, managing director at researcher Kingsman SA, owned by McGraw-Hill Cos., said in a statement e-mailed today.

White, or refined, sugar for March delivery fell 0.7 percent to $486.40 a ton by 11:24 a.m. on NYSE Liffe in London. The price touched $486.20, the lowest for a most active contract since July 2010. Raw sugar for March delivery was 0.4 percent lower at 18.29 cents a pound on ICE Futures U.S. in New York.

Millers in Brazil may make more ethanol at the expense of sugar next year if the country’s government raises the price of gasoline, potentially boosting demand for hydrous ethanol, which powers the country’s fleet of so-called flex-fuel cars, and increases the amount of anhydrous ethanol blended into gasoline.

Gasoline Prices

“The problem is that, for the moment at least, sugar still pays better than ethanol,” Kingsman said. “The Brazilian government is considering raising their domestic gasoline price and, by extension, the price of ethanol, but are worried about the negative effect that might have on domestic inflation. For the moment the political decision-making process is blocked.”

Robusta coffee for March delivery was little changed at $1,969 a ton on NYSE Liffe. Arabica coffee for March delivery was 1 percent lower at $1.5475 a pound on ICE Futures.

Carryover coffee stockpiles in Brazil, the world’s top producer, were 28.4 million bags as of Jan. 1, Terra Forte Exportacao e Importacao de Cafe Ltda. said by e-mail yesterday. That compared with 23.75 million bags a year earlier. The figure includes the government’s inventories, said Jayme Leme Neto, export manager at the Sao Joao da Boa Vista-based exporter. A bag of coffee weighs 132 pounds.

Cocoa for March delivery was down 0.3 percent at 1,479 pounds ($2,344) a ton in London. Cocoa for March delivery slid 0.8 percent to $2,267 a ton in New York.

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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