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Sugar Rises in London, New York on Shortfall, Stronger Demand

May 26, 2010 (Bloomberg)

Sugar advanced for a second day in London and New York on speculation a global supply shortfall will spur buyers to expand stockpiles.

Global supply is forecast to fall 8.5 million metric tons short of demand in the 12 months ending in September, according to the International Sugar Organization. The deficit in India, the world's biggest consumer, may widen to 5.8 million tons in the third quarter from 2.62 million tons in the preceding three months, Fortis Bank Nederland and VM Group estimate.

"Importers are likely to be replenishing their depleted stocks," Eugen Weinberg, head of research at Commerzbank AG in Frankfurt, wrote in a note today.

White, or refined, sugar for August delivery climbed 0.4 percent to $502 a ton on the Liffe exchange at 11:33 a.m. in London. It earlier gained as much as 1.6 percent. Raw sugar for July delivery advanced 0.13 cent to 15.38 cents a pound on ICE Futures U.S. in New York.

Weinberg expects prices of raw sugar to rise to 18 cents in the third quarter.

Sugar prices more than doubled last year as the dollar slumped and excess rains in Brazil and a weak monsoon in India reduced output in the world's two biggest sugar-cane growers.

Cocoa for July delivery gained 18 pounds, or 0.8 percent, to 2,416 pounds ($3,480) a ton on Liffe. Cocoa for July jumped $18 to $2,940 a ton on ICE Futures U.S. in New York.

Robusta coffee for July delivery rose $2 to $1,332 a ton on Liffe. In another ICE market, arabica-coffee futures for July advanced 0.4 percent to $1.3325 a pound.

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  • 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

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