Sugar Declines in London as Crude Oil Weakens; Cocoa Falls

By Rachel Graham

July 14 (Bloomberg) -- Sugar fell in London on expectations that a decline in crude-oil prices will weaken demand for alternative fuels, including ethanol derived from cane. Cocoa declined and robusta coffee advanced.

Sugar has risen 22 percent this year, buoyed by speculation that ethanol demand would accelerate. That helped mitigate for an expected supply surplus. Refined sugar production will probably exceed demand by 2 million metric tons in the 12 months through March 2009, Swiss-based researcher Kingsman SA estimates.

Sugar has fallen ``because of the stronger dollar and weaker oil,'' said David Sadler, manager of the sugar desk at Sucden (U.K.) Ltd. in London. ``Fundamentally, there is still a lot of sugar around.''

White, or refined, sugar for October delivery fell $2.60, or 0.7 percent, to $387.20 a ton as of 11:15 a.m. on the Liffe exchange in London. Raw sugar for October delivery in New York declined 0.19 cent, or 1.4 percent, to 13.8 cents a pound.

Three of seven traders, analysts and brokers surveyed last week forecast a gain in raw sugar traded in New York. Two expected a decline and two forecast little change. Three of seven traders, analysts and brokers surveyed said white, or refined, sugar traded in London would climb this week. Two said it would fall, and two predicted little change.

Cocoa for July delivery declined for a second trading session, falling 5 pounds, or 0.3 percent, to 1,604 pounds ($3,183) a ton on Liffe.

Hedge-fund managers and other large speculators decreased their net-long position in New York cocoa futures in the week ended July 8, according to U.S. Commodity Futures Trading Commission data.

Price Bets

Speculative long positions, or bets prices will rise, outnumbered short positions by 32,824 contracts on ICE Futures U.S., formerly known as the New York Board of Trade, the Washington-based commission said in its Commitments of Traders report. Net-long positions fell by 6,040 contracts, or 16 percent, from a week earlier.

Robusta coffee for September delivery climbed $1, or 0.3 percent, to $2,228 a ton.

To contact the reporter on this story: Rachel Graham in London rgraham13@bloomberg.net.