Sugar Jumps as Production Becomes Less Lucrative
Sugar futures pushed higher Wednesday, with more producers converting cane to ethanol and paring back sugar production.
Raw sugar for March rose 2.7% to end at 15.28 cents a pound on the ICE Futures U.S. exchange.
Sucden Financial said bulls in the market have been betting on a new policy which incentivizes the use of renewable fuel in Brazil. Cane producers are converting more cane to ethanol and moving away from sugar as a result, with the advantage of ethanol over sugar estimated at 1.21 cents a pound over New York sugar futures.
"Benchmark sugar prices have risen significantly since June, in line with global and specifically Brazilian gasoline prices," Societe Generale said in a note.
The firm is forecasting that prices for sugar will fall over the next six months to 14.40 cents a pound, driven by production recovery in India, Thailand, China and the European Union and a retracement in energy prices, with new supply outstripping demand by 5.5 million tons.
Cocoa for March rose 0.7% to end at $2,124 a ton, arabica coffee was up 0.3% to settle at $1.27 a pound, frozen concentrated orange juice for January ended flat at $1.6675 a pound and March cotton rose 1.4% to end at 71.14 cents a pound.
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(END) Dow Jones Newswires
November 22, 2017 16:26 ET (21:26 GMT)