Sugar, coffee prices slip as Brazil's currency tumbles

18 May, 2017

Brazil is the top producer of both commodities.

SUGAR

July raw sugar was down 0.44 cents, or 2.7 percent, at 15.86 cents per lb by 1421 GMT, after dipping to a session low of 15.58 cents.

The spot real market tumbled by more than 8 percent on Thursday. June futures trading on the currency had previously been halted after falling sharply.

This pressured sugar prices, since a weaker real makes prices more attractive for Brazilian producers in local currency terms, encouraging them to step up sales.

It also encourages the use of cane to produce sugar, much of which is exported for dollars, rather than ethanol, which is largely sold on the domestic market for local currency.

"This clearly has big implications for the sugar/ethanol price parity calculations in CS Brazil which have received so much attention as a potential 'soft bottom' to the sugar market," said James Liddiard, a consultant with Agrilion.

The ethanol parity level was previously widely cited as around 15 cents.

The market continued to monitor weather in Brazil with concerns that heavy rains over the next few days could disrupt production.

August white sugar was down $9.40, or 2.05 percent, at $449.80 a tonne, falling in tandem with raw sugar.

COFFEE

July arabica coffee was down 3.60 cents, or 2.68 percent, at $1.308 per lb.

Dealers said main driver of the decline was also the fall in Brazil's currency.

July robusta coffee fell $26, or 1.3 percent, to $1,971 a tonne.

Brazil's 2017 total coffee crop is expected to fall 11.3 percent from 2016 as yields fall in most producing regions in the off-year of coffee's biannual cycle, Brazil's Conab said on Thursday.

Brazil's 2017 coffee crop is seen at 45.6 million 60-kg bags versus a range forecast in January between 43.65 million and 47.51 million bags.

COCOA

New York cocoa rose $34, or 1.66 percent, to $2,088 a tonne after peaking at $2,088, the highest for the front month since April 6.

Dealers pointed to supportive technicals, as New York climbed above key resistance levels.

July London cocoa was up 17 pounds or 1.07 percent at 1,606 pounds a tonne.

 

Copyright Reuters, 2017
 

Read Comments