Raw sugar hits 18-month peak near 20 cents/lb while coffee also gains

By Reuters News
A truck transports sugar cane in a field at the Sao Martinho sugar mill in Pradopolis, Brazil September 13, 2018. REUTERS/Paulo Whitaker

LONDON, Oct 2 (Reuters) - Raw sugar futures on ICE hit an 18-month peak nearing 20 cents/lb on Friday as the market continues to price in a deficit next season. Coffee and cocoa prices also rallied.

SUGAR

* Raw sugar ​rose 4.1% to 19.72 cents per lb by 1538 GMT after peaking at an 18-month high of 19.79 cents.

* The contract was heading for gains of 13% this week as traders focus on the deteriorating production outlook and discount current ample supplies.

* Brazilian production dropped 41.6% in the first half of September as rains continue to disrupt fieldwork.

* "The outlook for the 2026/27 season has deteriorated significantly. In addition to higher oil prices, concerns about the upcoming harvest due to the El Nino weather phenomenon have become a key driver," said Commerzbank.

* The bank pointed out El Nino is expected to affect the crops of all three top growers — Brazil, India and Thailand. The coming EU crop is also likely to take a sharp hit from this summer's drought, it added.

* "Should these adverse weather conditions persist, further price increases are likely," Commerzbank added.

* White sugar gained 4.3% to $529.10 a metric ton.

COFFEE

* Arabica coffee rose 0.4% to $2.8950 per lb, heading for gains of 4% this week.

* Arabica has been boosted new term by quality concerns owing to excess El Nino-linked rains in Brazil.

* The market is also technically oversold after a steep decline from peaks set in late August.

* Looking ahead however, Rabobank said: "Our main view remains unchanged: prices should continue to fall. We continue to expect coffee to reach the exchange in November and December," said Rabobank.

* Robusta coffee rose 1.4% to $3,495 a ton.

COCOA

* New York cocoa was up 5.2% at $5,664 a ton after hitting a two-month low of $5,051 on Thursday.

* Top cocoa grower Ivory Coast's main crop is seen falling around 17% this season due to an El Nino-linked drought and reduced fertiliser and pesticide use, according to a Reuters survey of farmers, exporters, cooperatives and buyers.

* "We remain bearish," said Rabobank, adding that the 2025/26 stocks-to-use ratio is estimated at its second-highest since 2011/12 and the 2025/26 season’s surplus is sufficient to offset a potential 2026/27 deficit.

* London cocoa rose 5% to £4,235 a ton.

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