LONDON: Raw sugar futures on ICE rose on Thursday as oil prices resumed their rally amid fears of further escalation in the US-Israel war on Iran, though ample sugar supplies kept prices off their recent five-month highs.
A rise in energy prices tends to tempt cane mills in top grower Brazil and elsewhere to lower sugar output in favour of ethanol, a cane-based biofuel. This helps drive sugar prices higher.
SUGAR Raw sugar rose 1.2 percent at 15.74 cents per lb at 1313 GMT, having hit a five-month high of 15.91 cents on Tuesday. Iran is reviewing a US proposal to end the war, but has no intention of holding talks to end the conflict, Iran’s foreign minister said late Wednesday, re-igniting investor fears of a prolonged conflict. AP commodities said while sugar is under pressure from modest surpluses and heavy speculative selling, relief rallies, even if temporary, are likely to emerge given its sensitivity to weather risks and ethanol economics. He added that speculators’ short positions or bets on prices falling is large, meaning there is risk many will reverse course and bet on price gains if their position starts losing money. White sugar edged up 0.2percent to USD454.90 a ton after hitting a 5-1/2 month high of USD463.60 on Tuesday.
COFFEE
Arabica coffee fell 0.6percent to USD3.1415 per lb, having set a seven-week high of USD3.1950 on Tuesday. The weather anomaly known as El Nino is likely to develop globally around the third quarter of this year and is set to bring dryness and higher temperatures by early 2027 to tropical areas where coffee and cocoa grow, trader Sucafina said. Robusta coffee was little changed at USD3,631 a ton, after falling 0.9percent on Wednesday.
Dealers in top robusta grower Vietnam said farmers are not selling at the moment and that those needing to fulfil contracts have begun turning to Brazil and Indonesia for beans.
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