Raw sugar gains as Middle East tensions simmer, boosting oil

• Higher energy prices drive up the use of cane to produce the biofuel ethanol rather than sugar.
• March raw sugar rose 0.11 cent, or 0.8%, to 13.42 cents per lb by 1219 GMT.
• March arabica coffee fell 2.5 cent, or 1.9%, to $1.2380 per lb, having hit a one-month low of $1.2355 earlier in the session.

LONDON: Raw sugar futures on ICE rose on Monday, boosted by further gains in crude oil as tensions in the Middle East simmered after a US air strike in Baghdad killed the head of Iran's elite Quds force.

Higher energy prices drive up the use of cane to produce the biofuel ethanol rather than sugar.

SUGAR

March raw sugar rose 0.11 cent, or 0.8%, to 13.42 cents per lb by 1219 GMT.

Oil prices rose a further 2% as rhetoric from the United States, Iran and Iraq fanned tensions in the Middle East, a region that accounts for nearly half of the world's oil.

Dealers said sugar was poised to rise even before the oil price surge, with the market heading for a global deficit of more than 6 million tonnes this season, and a fair chance of a deficit next season.

Large sugar stocks built up over years of surplus are still overhanging the market, however.

Sugar has been range-bound for the last couple of weeks, after a rally that took prices to a more than one-year peak of 13.67 cents per lb on Dec. 13 ran out of steam.

March white sugar rose $2.70, or 0.8%, to $359.60 per tonne.

COFFEE

March arabica coffee fell 2.5 cent, or 1.9%, to $1.2380 per lb, having hit a one-month low of $1.2355 earlier in the session.

The market extended its retreat from a more than two-year high of $1.4245 set on Dec. 17.

Top coffee producer Brazil exported 3.16 million 60 kg bags of coffee in December, down from 4.10 million a year ago.

March robusta coffee fell $13, or 1% percent, to $1,359 per tonne.

COCOA

March London cocoa fell 31 pounds, or 1.7%, to 1,798 pounds per tonne, weighed partly by sterling's rebound against the dollar.

Ghana's graded and sealed (G&S) cocoa arrivals stood at 456,000 tonnes as of Dec. 19, unchanged from last year, figures from marketing board Cocobod showed on Monday.

March New York cocoa fell $15, or 0.6%, to $2,504 per tonne.