NEW YORK: Raw sugar extended gains in New York on concern that dry weather may cause lower output in top producer Brazil, tightening global supplies.
Futures rose as much as 1.9%, to the highest intraday price in a week. Prices have risen 7% since Aug 13 as Brazilian growers have had to contend with drought and wildfires at plantations.
“The impact of the drought is beginning to be felt,” said Livea Coda, an analyst at Hedgepoint Global Markets. Results for sugar-cane processing in the coming months should fall behind last year, she added.
Mills in Brazil’s key centre-south region crushed about 3% less cane in the second half of August compared with a year earlier, industry group Unica said last Thursday.
A lower quality of the raw material also forced mills to use more cane juice to produce ethanol, resulting in a 6% drop in sugar output.
Traders are also watching the amount of sugar that will be delivered against the October white sugar contract in London that expires on Friday.
A spread between October and December futures is widening.
The firm spread could indicate that there are “solid takers” to the sugar being delivered, said Michael McDougall, a partner at McDougall Global View. — Bloomberg
