LONDON: Raw sugar futures fell on Monday, weakened primarily by a drop in crude oil prices, while arabica coffee rose to a one-month peak.
Lower energy prices could prompt mills in Brazil to boost sugar output as it reduces the incentive for them to use cane to produce biofuel ethanol.
May raw sugar fell 0.6% to 20.28 cents per lb by 1341 GMT. The front month has risen on Friday to a 4-1/2 month peak of 20.45 cents.
Dealers noted production in India and Pakistan had been higher than originally expected. Broker Marex said in a note that the market’s bullish story had “been spoiled to a large extent by the increased cane production in India and Pakistan.” * May white sugar, which expires on Thursday, fell 0.5% to $557.40 a tonne.
July arabica coffee rose 1.5% to $2.35 per lb after climbing to a one-month high of $2.3570.
Dealers said the recent run-up in prices had been driven by speculative buying while a strengthening in Brazil’s real currency has slowed the pace of farmer sales in the world’s top producer.
Speculators increased a net long position in arabica coffee on ICE Futures US in the week to April 5, data from the Commodity Futures Trading Commission (CFTC) showed on Friday.