Sugar Rises in London on Smaller Crop Forecasts for Next Year

By Rachel Graham

Aug. 13 (Bloomberg) -- Sugar rose for a second day in London on forecasts for smaller harvests next year from India to the Philippines that will help reduce a global surplus. Cocoa gained and coffee declined.

Global sugar production in the year to September 2009 is expected to exceed demand by less than 1 million metric tons, down from a projected 9.2 million-ton surplus this season, according to Barclays Capital in London.

``The whole market is looking a long way forward,'' James Kirkup, a sugar broker at Fortis Bank, said by phone from London today. ``It's glossing over some of the short-term problems, like a sugar surplus.''

White, or refined, sugar for October delivery gained $2.60, or 0.7 percent, to $391.10 a ton on the Liffe exchange as of 12 p.m. in London. Raw sugar for October delivery gained 6 cents, or 0.4 percent, to 13.67 cents a pound in New York.

Sugar output in India, the world's biggest producer after Brazil, may total 21.7 million tons next year compared with 26.3 million estimated this year, Prakash Naiknavare, managing director of the Maharashtra State Cooperative Sugar Factories Federation Ltd., said yesterday.

Sugar exports from the Philippines, Southeast Asia's second-biggest exporter after Thailand, may drop 40 percent next year as production falls on lower fertilizer use, according to Sugar Regulatory Administrator Rafael Coscolluela.

Overseas sales, including those to the U.S., may fall to about 207,000 tons, Coscolluela said in an interview. Exports from the Philippines, which consumes about 1.95 million tons a year, may reach 345,000 tons in 2008, the highest since 1985.

Philippine sugar output may drop to 2.2 million tons in 2009 from an estimated 2.45 million tons this year, Coscolluela said.

Among other agricultural commodities traded in London, cocoa for September delivery gained 4 pounds, or 0.3 percent, to 1,477 ($2,768) pounds a ton and robusta coffee for September fell $17 to $2,257 a ton.

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