LONDON: Raw sugar futures on ICE fell to a four-week low on Thursday as dealers eyed rising sugar output in India and potential fuel tax cuts in Brazil that could boost sugar output.
July raw sugar fell 0.7% to 18.84 cents per lb at 1244 GMT, after dipping to a four-week low of 18.82 cents.
India could produce a record 36 million tonnes of sugar this season, nearly 3% more than estimated, a trade association said on Wednesday, calling on the government to allow exporters to ship an extra 1 million tonnes.
India last month imposed restrictions on sugar exports for the first time in six years by capping this season’s exports at 10 million tonnes to prevent a surge in domestic prices.
Elsewhere, dealers were focussed on Brazil, where a draft bill to cut taxes on fuels, particularly gasoline, could lower ethanol prices, thereby prompting cane mills to produce more sugar and less of the cane-based biofuel.
“The Brazil tax issue is too big to simply be shrugged off,” Commonwealth Bank of Australia analyst Tobin Gorey said in a note.
France’s Tereos, the world’s second-largest sugar producer by volume, posted a strong rise in annual earnings helped by high sugar and ethanol prices and good returns in its starch business, but warned its debt could rise next year.
August white sugar rose 1.7% to $573 a tonne.
July arabica coffee rose 0.5% to $2.3320 per lb.
Dealers were eying ICE arabica stocks, which have fallen to their lowest in three months at 1.022 million bags.
They also noted that premiums for coffee in the physical market are soaring.
July robusta coffee fell 0.3% to $2,098 a tonne.
Coffee prices in top robusta producer Vietnam drifted lower this week amid weak demand from exporters, traders said.
July New York cocoa fell 1.6% to $2,418 a tonne.
September London cocoa fell 0.9% to 1,750 pounds per tonne.