LONDON: Raw sugar futures on ICE were slightly lower on Wednesday as dealers kept a close watch on potential fuel tax cuts in Brazil which could boost sugar production in the world’s top exporter, while coffee and cocoa prices rose.

Sugar

July raw sugar was down 0.2% to 18.94 cents per lb at 1357 GMT after dipping to a four-week low of 18.84 cents.

Dealers said a proposal in Brazil to eliminate taxes on fuels in order to lower prices had the potential to prompt mills to switch to sugar production from ethanol and ultimately weigh on the sugar market.

“Were the change to become policy, ethanol prices would drop sharply and take sugar with it,” Commonwealth Bank of Australia analyst Tobin Gorey said in a note.

August white sugar fell 0.4% to $561.30 a tonne.

France’s farm ministry on Wednesday trimmed its forecast for 2022 sugar beet area to 397,000 hectares from a previous projection of 399,000 hectares.

Dealers said some farmers appeared to be switching from sugar beet to winter barley or rapeseed due to better returns for those crops.

Sugar and coffee prices fall as Brazil currency weakens

Coffee

July arabica coffee rose 0.5% to $2.3340 per lb, regaining some of the prior session’s losses.

The market derived some support from news that Brazil’s IBGE had downgraded its forecast for the country’s arabica crop this year by 5.9% to 35.2 million bags.

Dealers said prices were also underpinned by the recent decline in ICE certified arabica coffee stocks, which stood at 1.03 million bags as of June 7, down about from 1.12 million bags a month ago.

July robusta coffee rose 0.2% to $2,113 a tonne.

Cocoa

July New York cocoa rose 0.3% to $2,482 a tonne.

September London cocoa rose 0.2% to 1,774 pounds per tonne.