White Sugar Advances in London on Demand to Expand Stockpiles

By M. Shankar

Jan. 25 (Bloomberg) -- White sugar advanced in London on speculation that India, Indonesia and other importers will buy more because of expectations for a supply shortfall.

India, the world’s largest consumer, will have to import at least 7 million metric tons this season, Macquarie Group Ltd. said in a report this month. Indonesia, Southeast Asia’s largest sugar buyer, may have a shortfall of 530,976 tons in white sugar for household consumption in early May, Trade Minister Mari Pangestu told parliament members today in Jakarta.

“We are still seeing supply shortfalls across the world and that is supportive for sugar prices,” Peter de Klerk, an analyst with C. Czarnikow Sugar Futures Ltd. in London, said by phone today.

White sugar for March delivery advanced as much as $12.30, or 1.6 percent, to $759.30 a ton on the Liffe exchange, and was trading at $749.90 at 12:05 p.m. local time. The contract last week climbed to $767, the highest level in at least two decades. Raw sugar for March delivery rose 1.9 percent to 29.32 cents a pound on ICE Futures U.S. in New York.

Excess rains in Brazil and a weak monsoon in India hurt sugar-cane output from the world’s two biggest growers. Global demand for sugar will outpace supply by 13.5 million tons in the 2009-10 season, according to Czarnikow.

Five of 10 traders, analysts and brokers surveyed last week forecast that white sugar traded in London would gain, and three said the price would retreat.

Boosting Inventories

Indonesia, which had a white-sugar stockpile of 350,626 tons at the end of 2009, may produce 218,398 tons of sugar in the first four months of this year, while demand in the period may reach 1.1 million tons, according to Pangestu.

Egypt, Pakistan and Philippines have also said they intend to import sugar to cool domestic prices, crimping supplies.

Among other agricultural commodities traded on Liffe, cocoa for March delivery slid 10 pounds, or 0.4 percent, to 2,330 pounds ($3,766) a ton.

Cocoa exports from Ivory Coast, the world’s largest producer of the chocolate ingredient, jumped 18 percent to 184,448 tons in December, according to data supplied by the ports of Abidjan and San Pedro.

The West African nation is expected to ship 900,000 tons of the beans during this season’s harvest, little changed, from last year, according to officials from state agencies interviewed last week.

Robusta coffee for March delivery jumped $10, or 0.7 percent, to $1,370 a ton. It earlier climbed to as high as $1,385 a ton.

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