LONDON: Raw sugar futures on ICE hit a 2-1/2 week high on Wednesday as crude oil surged due to an outage on a pipeline from Iraq to Turkey and geopolitical tensions in Russia and the United Arab Emirates.

High energy prices tempt cane mills in Brazil to ramp up cane-based ethanol output at the expense of sugar.

SUGAR

March raw sugar rose 1% to 18.85 cents per lb at 1124 GMT, its highest since early January.

Dealers said many analysts see crude continuing to improve, which could have a significant bearing on how much cane Brazilian mills divert from sugar to ethanol when the 2022/23 season starts in April.

Still, they added, sugar is unlikely to return to its previous range of 20-20.50 and will even struggle to top 19.50 given the return of Indian selling.

March white sugar rose 0.5% to $511.60 a tonne.

COFFEE

March arabica coffee rose 0.4% to $2.4055 per lb.

Green coffee stored at ports in the United States fell by 10,029 60-kg bags by end-December to 5.83 million bags, the lowest level since June, data showed.

Brazil’s food supply agency Conab forecast arabica production at 38.78 million bags in 2022, smaller than the market expects.

HedgePoint analyst Natalia Gandolphi said output of 38.78 million bags would result in a global arabica deficit of 1-3 million bags.

March robusta coffee rose 0.6% to $2,207 a tonne, having hit a two month low on Tuesday.

COCOA

March London cocoa fell 0.6% to 2,615 pounds per tonne?, retreating from Monday’s three-month high of 1,790 pounds.

Europe’s fourth-quarter cocoa grind, a measure of demand, rose 6.3% from a year earlier to 365,826 tonnes, data showed.

“The data point to very robust cocoa demand in Europe,” said Commerzbank in a note. Swiss chocolate maker Lindt & Spruengli expects chocolate sales to grow 5-7% this year, following double-digit growth last year. It blamed supply chain bottlenecks for a sales slowdown in late 2021 in North America. March New York cocoa fell 1.2% to $1,748 a tonne.