Raw sugar gains as escalating Russia-Ukraine tension boosts oil
- May arabica coffee fell 1% to $2.4360 per lb
- May London cocoa slipped 0.2% to 1,709
- March raw sugar rose 1% to 18.38 cents per lb
LONDON: Raw sugar futures on ICE rose on Tuesday as escalating Russia-Ukraine tensions boosted energy prices, while London cocoa futures plumbed fresh six-week lows.
Sugar
March raw sugar rose 1% to 18.38 cents per lb at 1324 GMT.
Oil prices rose to their highest since 2014 on Tuesday after Moscow ordered troops into two breakaway regions in eastern Ukraine.
Germany put the certification of the Nord Stream 2 gas pipeline from Russia on hold in response to Moscow's move.
Rising energy prices can prompt cane mills in Brazil to divert production from sugar to ethanol, a cane-based biofuel.
Dealers said that given Russia is one of the largest energy exporters, sugar price risks are skewed to the upside.
"Sugar can only ignore the demand for ethanol so long," they said. May white sugar rose 1.1% to $491.50 a tonne.
White sugar prices ease, robusta and cocoa also down
Cocoa
May London cocoa slipped 0.2% to 1,709, having hit a six-week low of 1,705 pounds a tonne.
Dealers said cocoa was under pressure from hedge selling from top producers Ivory Coast and Ghana.
The discount for May cocoa futures versus July is widening, they said, indicating ample nearby supply.
May New York cocoa fell 0.8% to $2,619 a tonne.
Coffee
May arabica coffee fell 1% to $2.4360 per lb.
Dealers said the Ukraine crisis is prompting investors to dump assets perceived as risky, while a surprising addition of new coffee to be graded for ICE certification is also weighing on prices.
May robusta coffee fell 0.9% to $2,215 a tonne.
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