Virtual Metals Group

Media/Press

SOFTS-Sugar reels as cocoa bounces from 6-mth lows

4 March 2010 (Reuters) By Rene Pastor and Nigel Hunt

Raw sugar futures slid Thursday but were supported above 2010 lows as a firm dollar and the specter of a large crop from top producer Brazil weighed on the sweetener.

Coffee prices reeled but cocoa bucked the downward trend and edged up from 6-month lows as the market showed signs of stabilizing after a prolonged decline.

New York's May raw sugar futures fell 0.38 cent to settle at a three-month low of 21.67 cents per lb.

Since hitting a 29-year top during trading at 30.40 cents on Feb. 1, raw sugar has dropped 30.52 percent to Tuesday's session low of 21.12 cents.

London's May white sugar futures sank $27.50 or by 4.44 percent to conclude at $592.00 per tonne, the lowest level for the spot month since mid-November 2009.

"It is the big imminent (sugar) crop (in Brazil) that is weighing on everyone's minds. It is going to go a long way to providing relief (from supply tightness)," said Kona Haque, commodity strategist with Macquarie Bank.

Sterling Smith, an analyst for brokerage Country Hedging Inc. in Minnesota, said sugar performed well in holding the lows of Tuesday and a rebound may be in the offing as part of a consolidation effort.

"It looks like the worst of the beating is over," he said, adding the sweetener may be setting up for a pretty "fierce bounce" which could retrace a chunk of its losses from 30.40 to 21.12 cents.

Sugar production in the key center-south region of Brazil is expected to start gathering pace.

Brazil's 2010/11 cane crop should yield around 37.3 million tonnes of sugar, the head of Datagro, a consultancy specializing in sugar and cane-derived ethanol told a sugar conference in Moscow on Thursday.

Haque said the market should eventually settle down to trade in a range of about 19 to 22 cents for most of the year, underpinned by strong import demand.

VM Group analyst Gary Mead said the fall in prices could "push them (potential importers) back into the market."

COCOA MOVES UP, COFFEE LOWER

Cocoa prices showed signs of stabilizing after a steep decline that saw U.S. beans drop to a 6-month low during the last few weeks.

Dealers said industry buying had helped underpin the cocoa market with prices now far below a 30-year peak for the spot contract in New York of $3,510 a tonne set in mid-December.

The market has been weakened partly by improving prospects for mid-crops in both Ivory Coast and Ghana.

New York's May cocoa futures added $6 to end at $2,829 per tonne. London's May cocoa contract gained 17 to end at 2,162 pounds a tonne.

Coffee futures also suffered from weakness in the commodity sector.

London's May robusta contract fell $35 to end at $1,249 a tonne, having touched a contract low of $1,244. New York's May arabica contract dropped 1.90 cents to finish at $1.302 a lb.

VM Group in the News

2010

2009

2008

2007

2006

2005

  • September 26th - Europe's central banks seen queuing up to sell gold (Reuters)
  • THE YELLOW BOOK - Virtual Metals Research & Consulting and Fortis Bank in a new analysis of the global fundamentals and outlook for the international gold market.
  • Virtual Metals Research & Consulting announces today the launch of an innovative mechanism for the funding and development of sustainability projects in the minerals extraction industry. The new entity – called MineLife - is a collaboration between Virtual Metals, Barrick Gold Corporation, Gold Fields Limited, and Harmony Gold Mining Limited. It is dedicated to alleviating poverty and building long-term socio-economic development in Africa and, ultimately, in other developing markets.
  • Q2 05 The Hedge Book - Global hedging falls 2.5 Moz to 53.1 Moz
  • The latest edition of the Hedge Book, sponsored by Mitsui, shows dehedging quickened to 2.5 Moz in Q2 05, up from just 1.3 Moz in Q1 05. For the press release and full report click here

© 2009 Virtual Metals. All Rights Reserved. Logos by Shen Schubert

CONTACT US: info@virtualmetals.co.uk