LONDON: Raw sugar on ICE steadied on Friday but remained vulnerable to losses after hitting two-week lows in the prior session, with dealers betting top producer Brazil will manage to keep energy prices in check.
Falling energy prices there prompt cane mills in Brazil to ramp up sugar output at the expense of ethanol, a cane-based biofuel whose price moves in sync with energy.
July raw sugar dipped 0.1% to 19.52 cents per lb at 1241 GMT, after hitting its lowest since May 13 at 19.27 on Thursday. Dealers noted Brazil’s efforts to cut the ICMS state tax in a bid to lower gasoline prices, saying the proposed law still needs to pass through the Senate. Still if it succeeds, ethanol prices are likely to fall, dragging sugar lower.
Earlier this week, Brazil’s President Jair Bolsonaro, in a bid to hold down energy prices, ousted the Petrobras CEO. Thailand said on Friday it expects to export 7.6 million tonnes of sugar in the production year 2021/22, 46% more than last year. August white sugar slipped 0.1% to $565.10 a tonne.
July arabica coffee fell 0.8% to $2.2505 per lb, having closed up 4.4% in the prior session. There were reports late on Wednesday about renewed frost risk in top producer Brazil. Forecaster Climatempo, however, said on Thursday there was no risk for now and that temperatures in growing regions will remain above freezing. July robusta coffee fell 0.8% to $2,093 a tonne.
July New York cocoa dipped 0.1% to $2,461 a tonne, having hit its lowest since late November on Wednesday. September London cocoa fell 0.6% to 1,732 pounds per tonne.