Bloomberg; White Sugar Falls in London After Australia Cyclone Concern Ebbs

February 04, 2011

Bloomberg

Sugar fell for a second day in London after damage to Australian plantations caused by Tropical Cyclone Yasi was less severe than some traders had expected.

Futures tumbled as much as 9.9 % in New York yesterday, the most this year, as automatic sales by computer programs exaggerated a slide that started after the first estimates of the impact of the extreme weather in Australia, the world’s third largest exporter.

“The damage in Australia was not as bad as expected,” Jason Cole, a broker from SCB, said today by e-mail. “The huge drop was caused by technical selling which triggered stops on the way down. Fundamentally, we remain bullish and would see this as an opportunity to buy again.”

White, or refined, sugar for March delivery fell as much as $32.20, or 4 %, to $782 a metric ton on NYSE Liffe in London and was down 2.2 % at $796 a ton at 10:23 a.m. Raw sugar for March delivery rose 0.58 cent, or 1.8 %, to 32.62 cents a pound on ICE Futures U.S. in New York.

Sugar futures in London may climb next week on concern that global supplies will trail demand. Five of eight traders, analysts, and brokers surveyed by Bloomberg News said refined sugar on NYSE Liffe will rise, while two said it will fall. One was neutral. Survey respondents were split on raw sugar. Four of nine said raw sugar traded in New York will rise, while four said it will decline. One was neutral.

Australia may produce 3.8 million tons of sugar in the 2011-12 season, compared with 3.6 million tons a year earlier, Australia and New Zealand Banking Group Ltd. said in a report yesterday.

Exports will be constrained at below 2.5 million tons, ANZ economist Paul Deane wrote in the report. At the end of 2010, there were 5.7 million tons of sugar cane still left unharvested and probably escaped “any major cyclone damage,” he wrote, referring to Cyclone Yasi.

Sugarcane plantations in the north of Australia’s Queensland state may lose 50 % of production potential after the cyclone cut through an area accounting for a third of output, Brisbane-based Canegrowers said today in an e-mailed statement. Losses to the industry could be at least A$500 million ($507 million), it said.

Robusta-coffee futures for March delivery slid $18, or 0.8 %, to $2,221 a ton on NYSE Liffe. Arabica coffee for March delivery fell 2 cents, or 0.8 %, to $2.4935 a pound in New York. The price reached the highest since June 1997 yesterday.

Cocoa for March delivery on NYSE Liffe fell 25 pounds, or 1.1 %, to 2,166 pounds ($3,492) a ton. Cocoa futures for March delivery declined $42, or 1.2 %, to $3,316 a ton on ICE.

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