Raw sugar futures hit five-month highs on Thursday as speculators grew increasingly bullish after the escalating U.S.-Israeli war against Iran pushed oil prices near a three-and-a-half-year peak.
Rising energy prices could prompt cane mills in top grower Brazil to raise ethanol output and lower sugar production. Ethanol is a cane-based biofuel.
Raw sugar rose 3.7 per cent to 15.34 cents per pound, after hitting its highest since mid-October at 15.49 cents.
Marking a major escalation in the war, Iran attacked key energy facilities across the Middle East following Israel’s strike on its giant South Pars gas field.
Sugar speculators are covering their short positions by taking on long positions, which are essentially bets on prices rising, noted Alberto Peixoto, director at AP Commodities.
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He added, however, that “producer selling is greater than spec buying (overall),” signalling a limit to how much prices can rise.
White sugar rose 3.1 per cent to US$450.60 a metric ton, having hit its highest since early October at US$455.80.
Robusta coffee rose two per cent to $3,647 a ton. Dealers in top robusta producer Vietnam said local prices have risen but remain below the level at which farmers, cautious about logistics risks linked to the Iran war, are willing to sell.
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Arabica coffee rose two per cent to US$2.9870 per pound.
Many analysts expected a record crop in top grower Brazil this year, although for now, farmers are holding back sales in the hope of higher prices.
Rabobank said it expects a near-term price recovery given farmer sales are slow, major carriers have turned away from the Red Sea, freight, fertilizer and energy costs are rising, and further shipping disruptions are likely.
London cocoa rose 2.5 per cent to 2,464 pounds per ton. Ghana‘s licensed cocoa buyers lack the funds to buy beans from farmers despite the government’s recent move to slash the fixed price it sets for the chocolate ingredient, sources told Reuters.
New York cocoa fell 2.2 per cent to $3,333 a ton.
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