Sugar Falls to One-Month Low on Speculation Gains Were Overdone

By M. Shankar

Sept. 8 (Bloomberg) -- White sugar fell to a one-month low in London on concern that prices no longer reflected the outlook for demand. Robusta coffee and cocoa advanced.

White, or refined, sugar for December delivery slid as much as $12.90, or 2.4 percent, to $532.70 a metric ton on the Liffe exchange, the lowest compared with intraday prices since Aug. 7. The contract was trading at $540 a ton at 1:06 p.m., paring its gain this year to 70 percent.

“The market is getting a bit more cautious,” Abah Ofon, an analyst with Standard Chartered Bank in Dubai, said at a sugar conference in Cape Town, South Africa, today. “There is going to be more volatility next year.”

The driest June in 83 years in India and excess rains in Brazil have crimped production in the two major producing countries. The price of raw sugar traded in New York has advanced 78 percent this year and traded 3.5 percent lower at 20.85 cents a pound today.

“Sugar will trend a bit lower once harvesting picks up in Brazil and assuming the weather is good,” Ofon said. “We are probably going to stabilize at around 21 cents per pound for raw sugar” for the remainder of the year, he said.

Sugar production in Brazil is forecast to climb 9.8 percent in 2009-10, the London-based International Sugar Organization said in its monthly report today.

A recent revival of the monsoon helped India’s drought- stricken sugarcane crop, the country’s agricultural commissioner said last week. Supplies are sufficient to meet higher demand during the festival season, junior Food Minister K.V. Thomas said Sept. 4.

Sugar Production

European Union sugar production will rise to 16 million tons in 2009-10 from 14.9 million tons a year earlier, F.O. Licht said in an e-mailed statement yesterday.

Among other agricultural commodities traded on Liffe, cocoa for December delivery advanced 1 percent to 1,879 pounds ($3,116) a ton.

Ghana, the world’s second-largest cocoa producer, will miss its target of producing 1 million tons a year by the 2010-11 season, according to Tony Fofie, chief executive officer of the Ghana Cocoa Board.

The state-run board, which oversees the industry, now expects the West African country to produce 1 million tons a year by the 2012-13 season, Fofie said in an interview at the Cocoa Producers Alliance conference in Lome, Togo, late yesterday.

Robusta coffee for November delivery gained 0.7 percent to $1,504 a ton.

To contact the reporter on this story: M. Shankar in London at mshankar@bloomberg.net