LONDON: Raw sugar futures on ICE fell on Wednesday amid a pause in the blistering rally in global energy and grains prices caused by Russia’s invasion of Ukraine.
May raw sugar fell 1.1% to 19.21 cents per lb at 1330 GMT.
Oil prices slid as some investors took the view that the U.S. ban on Russian oil imports may not worsen a supply shock, while wheat fell for a second day after a record-breaking rally.
While sugar continues to derive support from sky-high global energy prices, doubts are growing about whether they will prompt cane mills in Brazil to increase output of biofuel ethanol at the expense of sugar.
Brazilian President Jair Bolsonaro on Monday threw his weight behind measures to hold down domestic fuel prices, reducing the incentive for mills to shift output.
“While the pressure grows for higher fuel prices in Brazil, the government is applying pressure in the opposite direction. Consequently we do not think the tight link between oil and sugar should persist,” said Commonwealth Bank of Australia in a note.
A global deficit in sugar supplies in the 2021/22 season is expected to narrow by 42% due to better than expected sugar production in India, the world’s second-largest sugar producer, broker StoneX said.
May white sugar fell 1.3% to $529.40 a tonne.
May arabica coffee fell 0.7% to $2.3135 per lb, having settled up 3.9% on Tuesday.
Coffee giant Starbucks is suspending all business activity in major coffee importer Russia, including shipment of its products and also including cafes run by a licensee.
May robusta coffee edged up 0.2% to $2,098, having settled up 2.9% on Tuesday.
May New York cocoa fell 1.3% to $2,603 a tonne.
May London cocoa fell 0.6% to 1,758 pounds per tonne.