Sugarcane harvester in Piracicaba
NEW YORK/LONDON (Reuters) – Crude sugar futures on ICE closed higher on Wednesday, extending strong gains from the previous session as oil prices soared on growing fears of supply disruption.
Arabica coffee fell more than 3% to its lowest level in two months as some funds liquidated long positions.
SUGAR
* Raw sugar for May rose 0.3 cents, or 1.6%, to 18.64 cents a lb, ending up 3.6% on Tuesday.
* Higher energy prices could divert cane from sugar production to ethanol production in the largest producer, Brazil.
* While fuel prices in Brazil have been stable since January, when state-owned Petrobras last raised prices, traders believe pressure is building for a further increase, which would intensify ethanol’s appeal among mills.
* Goldman Sachs said gasoline prices in Brazil are currently 23% below international parity.
* White sugar for May advanced $5.90, or 1.2%, to $515.20 a ton.
COFFEE
* Arabica coffee for May fell 6.8 cents, or 2.9%, to $2,292 a lb. It previously hit its lowest price since January 4 at $2,272 per pound.
* Traders said the move on arabica appears to have been driven by profit-taking speculators exiting some of their large net long position amid uncertainty in the broader financial market brought on by the war in Eastern Europe.
* Concern about demand in Russia, one of the world’s biggest consumers, was also cited.
* Coffee traders are seeking advance payments on any new orders from Russia as Western sanctions hit the country’s financial system.
* Robust coffee for May declined $54, or 2.6%, to $2,030 a tonne, having previously hit its lowest level in 5½ months at $2,026.
(Reporting by Marcelo Teixeira and Maytaal Angel)
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