LONDON: Raw sugar futures on ICE steadied near recent five-year lows on Tuesday, as ample near term supplies continued to weigh and as dealers eyed oil price falls.
Lower energy prices are bearish for sugar because they can encourage cane mills to produce more sugar and less ethanol, a cane-based biofuel.
SUGAR: Raw sugar dipped 0.1 percent to 13.46 cents per lb at 1249 GMT, having hit a five-year low of 13.22 on Friday.
White sugar edged up 0.5 percent to USD419.70 a metric ton.
Oil prices fell on expectations peace talks between the US and Iran will take place this week.
The UK’s Associated British Foods’ sugar unit has posted a first half operating loss due to low prices in Europe, and the company now expects the unit to post a full year loss as well.
“The market is still dealing with a large overhang in supply for 2025/26,” said broker ADMIS.
It added, however: “Expectations for 2026/27 have been running from a smaller surplus to a small deficit. The Indian government is expecting below average monsoon rainfall this year.”
Soaring oil prices since onset of the Iran war are driving renewed demand for biofuels, including those made from sugar, as the need to tackle a fossil fuel shortage outweighs concerns that the fuels might drive up food prices.
COCOA: London cocoa fell 0.7 percent to 2,487 a ton, having settled up 3.2 percent on Monday.
“The market is digesting last week’s demand data. While Asian grind came in better than expected, European grind was disastrous,” said broker StoneX.
It added, however: “There has been increasing chatter regarding grind recovery for the latter half of the calendar year.”
Nestle India has posted a 26 percent increase in quarterly profit, benefiting from strong demand for packaged foods, including KitKat chocolates.
New York cocoa fell 1.3 percent to USD3,352 a ton.
COFFEE: Arabica coffee fell 3 percent to USD2.79 per lb, having hit its lowest since early March at USD2.7850.
In the hope of boosting prices, Brazilian farmers are holding back sales ahead of what is expected to be a bumper harvest.
Robusta coffee fell 1.7 percent to USD3,319 a ton. The contract hit an eight-month low of USD3,173 in early April.