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Sugar Futures Jump to Four-Month High in N.Y. as Brazil Output DropsJuly 1st, 2008Sugar futures rose to the highest price since March as output fell in Brazil, the world's biggest grower, and crude oil's gain lifted demand for plant-based fuel. Sugar output in Brazil's main producing region dropped 14 percent this year through mid-June as mills turned more cane into ethanol to meet higher demand, industry group Unica said yesterday. Oil gained as much as 2.4 percent in New York after ABC News said Israel is increasingly likely to attack Iran this year. That raised demand for ethanol, a fuel made from cane. ``We had bullish numbers from Unica yesterday,'' said James Cassidy, the head sugar trader for Newedge USA LLC in New York. Sugar production will need to accelerate to reach Unica's estimate of 28.6 million tons, he said. Sugar futures for October delivery rose 0.62 cent, or 4.7 percent, to 13.72 cents a pound on ICE Futures U.S., the former New York Board of Trade. Earlier, the contract touched 13.9 cents, the highest since March 6. Most-active futures jumped 31 percent in June, the biggest monthly gain since 1989. Mills in the Center South region, which account for more than 80 percent of Brazil's sugar and ethanol output, produced 4.69 million metric tons of the sweetener this year through the middle of last month, down from 5.45 million tons during the same period a year earlier, Unica said yesterday in a statement. Ethanol ProductionBrazil's sugar production has been slowed by heavy rain, which cuts the sucrose, the ingredient refined into ethanol and sweetener, in sugar cane. Also, more cane is being diverted to ethanol production: mills in the region turned 62 percent of their sugar cane into fuel, compared with 57 percent a year earlier.Sugar production estimates had been bearish, Cassidy said. The global sugar surplus will reach 3.29 million metric tons in the year through September 2009, Kingsman SA forecast on May 30. The sliding dollar also boosted sugar, Cassidy said. The dollar dropped as much as 0.5 percent against the euro, lowering the cost of commodities for investors using the European currency. The Reuters/Jefferies CRB Index of 19 commodities rose as much as 1.3 percent today, touching a record. - Ron Day in New York at Bloomberg. Click here for your Free Sugar Futures Trading eGuide | |