LONDON: Raw sugar futures on ICE climbed on Thursday on news that Brazil will tax ethanol imports, while arabica coffee touched a fresh six-week low as fund selling persisted.
SUGAR
October raw sugar was up 0.09 cent, or 0.7 percent, at 13.76 cents per lb by 1349 GMT, after hitting a high of 14.00 cents.
Dealers pegged the bounce on Brazil's move late on Wednesday to approve taxing ethanol imports for the first time in a move to protect local producers from growing shipments coming from the United States.
This would make ethanol more attractive for Brazilian mills, potentially convincing them to switch more of their production away from sugar.
A looming global surplus of sugar remained in focus, with market participants sceptical the news was enough for a lasting recovery in prices.
"It's certainly friendly for the market," said one dealer. "But it doesn't wipe out the kind of surplus we're facing."
Dealers said ethanol demand in Brazil remained subdued while stocks were ample after strong imports into the country up to now.
"It's not certain to us that Brazil needs that much more ethanol," the dealer said. "And as the (production) mix starts to change, the domestic ethanol price would start to crumble fairly quickly and that will likely encourage people back to sugar."
The Brazilian government on Thursday raised its estimate for total sugar production in the current crop to 39.38 million tonnes.
October white sugar rose $2.80, or 0.8 percent, to $377.40 a tonne.
COFFEE
December arabica coffee fell 1.20 cent, or 0.9 percent, to $1.2750 per lb, its lowest since July 12 on technical selling.
November robusta coffee also fell $20, or 1 percent, to $2,080 per tonne.
Dealers said the premium for the spot contract over further positions had widened, signalling potentially tightening nearby supplies.
The September contract was down $11, or 0.5 percent, at $2,120 per tonne.
"The structure is backwardating even further," said one dealer. "So although it's coming off, it's still showing signs of strength."
The September contract was at a premium of about $40 per tonne to the November position and about $90 to the March contract.
COCOA
December London cocoa fell 2 pounds, or 0.1 percent, to 1,487 pounds a tonne.
December New York cocoa eased $6, or 0.3 percent, to $1,865 a tonne.
Comments
Comments are closed for this article.