Sugar Falls for a Second Day in London on Supply Speculation

By M. Shankar

Jan. 27 (Bloomberg) -- White sugar dropped for a second day in London to a one-week low on speculation that Brazilian and European Union supplies may help ease a production deficit.

Output in Brazil’s Center South, the world’s largest sugar- producing region, rose 34 percent to 68,800 metric tons in the first half of January from a year earlier, industry association Unica said yesterday. The European Commission said today it plans to permit exports of an additional 500,000 tons of sugar above the EU’s quota to check rising prices.

“The price situation on the EU and world market as well as production costs for beet and sugar in the EU are such that out- of-quota sugar can be exported without violating WTO subsidy commitments,” Agriculture Commissioner Mariann Fischer Boel said in the statement.

White, or refined, sugar for March delivery fell as much as $6.30, or 0.8 percent, to $738 a ton, the lowest price since Jan. 19, on the Liffe exchange. The contract was at $738.60 at 11:15 a.m. local time. Raw sugar for March delivery slid 0.4 percent to 29.18 cents a pound on ICE Futures U.S. in New York. Prices doubled last year in both markets.

The EU had set a sugar-export quota of 1.35 million tons for 2009-10 to comply with a World Trade Organization ruling from 2005. Global demand for sugar will outpace supply by 13.5 million tons this season, according to Czarnikow Group Ltd., a broker of the sweetener.

Among other agricultural commodities traded on Liffe, cocoa for March delivery fell 9 pounds, or 0.4 percent, to 2,300 pounds ($3,730) a ton. The retreat was the third in a row. Robusta coffee for March delivery climbed $19, or 1.4 percent, to $1,366 a ton.

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