Sugar prices extended their gains, with recent extreme weather in Brazil continuing to have an effect on supply.
White sugar futures in London rose as much as 1.46% to US$508.70 a tonne, a fresh four-year high. The refined sweetener has been on a rising streak for seven consecutive sessions.
Recent gains in white sugar prices for the 2022 season “further restore refining premiums, suggesting there is not yet any resistance from consumers to higher prices,” Tobin Gorey, an agricultural commodities strategist at the Commonwealth Bank of Australia, said in a research note.
He added that India on Tuesday suggested it won’t use export subsidies in the upcoming season.
Raw sugar in New York advanced 0.6% to 20.14 cents a pound, after settling on Tuesday at the highest level since February 2017.
Sugar prices have increased after extreme drought and frost damaged crop supply in Center-South Brazil, where most of the world’s supply is produced.
The weather, the worst in more than two decades, means the country’s sugarcane crop will be reduced for a second straight year, according to consulting firm Datagro.
“It has been a swift rally over the past couple of weeks, and it might be time for traders to take stock of the situation,” analysts at ADM Investor Services International Ltd said in a research note. “A global deficit in production for next season is probably a foregone conclusion, and it now
remains to see how big.”
Much will depend on production in Center-South Brazil, they added, noting that India is filling supply gaps and demand is “remaining rather muted.”
In other soft commodities, arabica coffee rose 0.3% after slumping 2.3% on Tuesday. Cocoa declined in New York.