SOFTS-Raw sugar prices rise on short-term supply tightness

• March raw sugar was up 0.27 cent, or 1.8pc, at 15.55 cents per lb at 1235 GMT.
• Dealers said the recent weakness of Brazil's real currency  provided a further incentive to produce sugar which can be exported for dollars.

LONDON: Raw sugar futures were higher on Wednesday, climbing back up towards last week's 2-1/2 year high, supported by supply tightness, while arabica coffee and cocoa prices also rose.

SUGAR

March raw sugar was up 0.27 cent, or 1.8pc, at 15.55 cents per lb at 1235 GMT.

Dealers said the market was showing signs of renewed strength after a period of consolidation which followed an advance to a 2-1/2 year high of 15.90 cents last week.

They noted there was short-term supply tightness ahead of the Brazilian harvest, which normally starts around early April, with front month March trading at a premium of around 0.46 cent to May.

A favourable outlook for the cane crop in the centre-south of Brazil, combined with the recent rise in sugar prices, could, however, lead to a rise in production this year in the major producing region.

Sugar competes with biofuel ethanol for available cane supplies in Brazil and the proportion used to make the sweetener is expected to rise in the upcoming season.

"With a larger share of the canes dedicated to sugar, the centre-south region could produce 3 to 4 million tonnes more sugar," analysts Agritel said in a market note.

Dealers said the recent weakness of Brazil's real currency  provided a further incentive to produce sugar which can be exported for dollars.

May white sugar rose $4.70, or 1.1pc, to $421.50 a tonne.

Indonesia's Finance Minister Sri Mulyani Indrawati on Wednesday submitted a proposal to parliament to levy taxes on sweetened drinks to control the rise of diabetes and obesity levels.

Some 2pc of Indonesians aged 15 and above suffered from diabetes in 2018, up from 1.1pc in 2007, while the number of obese adults rose from 10.5pc in 2007 to 21.8pc in 2018.

COFFEE

May arabica coffee rose 0.60 cent, or 0.55pc, at $1.0945 per lb.

Dealers said the market was supported by signs that it was beginning to tighten following a slowdown in exports from top producer Brazil.

They noted U.S. green coffee stocks had fallen during January and certified ICE exchange stocks were also expected to fall in coming weeks.

May robusta coffee fell $6, or 0.5pc, to $1,287 per tonne.

COCOA

May London cocoa rose 25 pounds, or 1.25pc, at 2,026 pounds a tonne.

Dealers said the market was supported by a diminishing outlook for crops in the world's top two producers, Ivory Coast and Ghana.

May New York cocoa rose $28, or 1.0pc, at $2,874 a tonne.