Sugar gains after plumbing 5-year lows as oil prices remain elevated

LONDON: Raw sugar futures on ICE rose on Friday, recovering from last week’s five-year-low and snapping a three-week losing streak as dealers set aside concerns over ample supplies and focused on elevated energy prices.

High energy prices are bullish for sugar as they tend to prompt cane mills to produce less sugar and more ethanol, a cane-based biofuel.

SUGAR

Raw sugar rose 0.7percent to 13.69 cents per lb at 1238 GMT, having hit a five-year low last Friday. “The market appears to have found a floor and speculators have let up on their selling for now,” said sugar broker and consultant Michael McDougall. He noted sugar is creeping back up near 14 cents amid fears the Iran war might escalate further over the weekend, which will push crude oil prices higher still.

There are also harvest delays in Argentina and South Africa and beet planting issues in the US, the Netherlands and Belgium, McDougall said, adding the issues are not major on their own but, taken together, they lend sugar support. White sugar rose 0.6percent to USD430 a metric ton.

COFFEE

Arabica coffee rose 1.1percent to USD3.0375 per lb, heading for weekly gains of 7percent. The contract hit a one-month high of USD3.0405 earlier in the session. The contract is gaining support from certified exchange stocks, which are heading back down to the psychologically significant 500,000-bag mark.

Traders are also showing interest in receiving certified coffee stocks on the May contract expiry, dealers said. Top grower Brazil is also expected to have a bumper crop this year, which could weigh on coffee prices going forward.

Robusta coffee rose 1.4percent to USD3,556 a ton, having also hit a one-month high earlier.

COCOA

London cocoa fell 1.2 percent to 2,544 a ton, but was headed for weekly gains of 5percent.

“The market has been chopping around this month, but it does have a series of higher highs and higher lows that suggest a potential bottom,” said broker ADMIS.

Expectations are growing that cocoa demand will recover as prices have lost nearly three-fourths of their value since late 2024. New York cocoa fell 1percent to USD3,423 a ton.