Sugar rises on renewed Asian demand, bets supplies will tighten

Sugar rose on renewed demand by Asian importers amid speculation that this year’s price slump fails to reflect tight supplies.

This month, Pakistan plans to buy 400,000 metric tons after purchasing 100,000 metric tons of white sugar last week. Before today, raw sugar tumbled 48 per cent in 2010 on bets that rising supplies in Brazil and India, the world’s top producers, would erase a global deficit.

“The market is pausing for breath after the recent declines,” said Nicholas Snowdon, an analyst at Barclays Plc in London. “From the fundamental perspective, we have news of Pakistan buying and that is also providing traction.”

Raw sugar for July delivery climbed 0.54 cent, or 3.9 per cent, to 14.43 cents a pound at 10:11Am on Ice Futures US in New York. Before today, the most-active contract declined 8.3 per cent this month.

White-sugar futures for August delivery advanced $8.50, or 1.8 percent, to $477 a ton on the Liffe exchange in London.

Prices more than doubled last year as excess rains in Brazil and a weak monsoon in India hurt output. The world may face a production deficit of 8.5 million tons in the year ending Sept. 30, compared with 9.4 million tons forecast in February, the International Sugar Organization said last week.

“The consumers are slowly returning to the market,” said Bruno Lima, a risk-management consultant at FCStone in Campinas, Brazil. “Besides Pakistan, there are talks that China is scouting for sugar supplies.”