:. Food Industry News


Sugar Rises on Two-Month High, Holiday Slows Trade

Source: Reuters
19/01/2009

London, Jan 19 - White sugar futures climbed to a two-month high on Monday while cocoa edged up on a weaker pound and robusta coffee was little changed.

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Volumes were light with U.S. markets closed for Martin Luther King Jr. Day. They will reopen on Tuesday.

Dealers said London sugar prices had suffered a late setback on Friday while New York raws finished strongly, leaving the markets slightly out of line.

"We may be playing a little bit of catch-up," one London dealer said.

March whites were up $2.60 at $344.00 a tonne at 1202 GMT after touching $345.00, its highest level since mid-November.

Dealers said moves were exaggerated by thin volumes with U.S. markets shut.

"If somebody sold 100 lots we would probably lose most of the profits," one dealer said.

Dealers said the market was underpinned by expected imports of raw sugar by India following a lower crop in 2008/09 although the outlook remained unclear.

"I think everyone is playing the India factor close to their chests. It is a very unpredictable situation," one dealer said.

India is about to import raw sugar for the first time in three years and freezing weather has hit China's sugar crops, but this may not be enough to offset an expected record cane crop from Brazil this year.

Cocoa futures edged up, boosted mainly by the weakness of sterling against the dollar.

May cocoa futures in London rose three pounds to 1,743 pounds a tonne.

Sterling fell against the dollar and the euro on Monday after the UK government said the Bank of England would be able to buy assets for monetary purposes if necessary, which investors took as the first step to quantitative easing.

Dealers said the market was underpinned by slow port arrivals in top producer Ivory Coast with reduced production prospects in West Africa likely to result in a third consecutive global deficit in 2008/09.

Cocoa arrivals at ports in Ivory Coast from Oct. 1 to Jan. 18 were around 592,000 tonnes, compared with 866,000 tonnes received in the same period last year, exporters said on Monday in a rough weekly estimate.

Robusta coffee futures were little changed in thin volume with March off $2 at $1,660 a tonne.

Dealers said the market has been creeping up towards the upper end of its recent range, underpinned by an expected tightening in supplies during 2009/10. March robustas has traded between $1,551 and $1,716 this month.

A booming trade in contraband coffee smuggled into Guatemala could leave Honduras short of the caffeine-packed bean, hitting export income, industry leaders said on Friday.



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