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Evening markets: sugar hits three-year high

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Corn was not the only show in the food commodity world on Thursday. Its Chicago partners, wheat and soybeans, put in better performances than in recent days, while New York sugar hit its highest for three years.

The backdrop of booming external markets helped. On Wall Street, the Dow Jones industrial rose above 9,000 to a fresh 2009 high, helped by strong results from companies ranging from drugmaker Bristol-Myers Squibb to online retailer eBay.

That improved sentiment in oil markets too, with benchmark New York crude up 2.4% at $66.94 a barrel at 17:15 GMT.

Against that backdrop, any hope of positive news among food commodities was likely to spark fund buying.

Sugar, sugar

Sugar had it, with India's Cabinet meeting to discuss an extension beyond this month to a period of tax-free imports, amid growing fears of a supply squeeze.

India, the world's biggest sugar consumer, turned from exporter to importer in 2008-09, when a switch to other crops, such as grains, combined with unhelpful weather sent domestic production way below demand.

This shortfall could recur in 2009-10, thanks to damage caused to crop yields caused by an erratic monsoon at a time when the country has run through much of its sugar inventories.

Cocoa also in demand

In London, white sugar closed up 1.3% at $474.9 a tonne, the highest finish since July 2006.

New York raw sugar for October touched 18.39 cents a pound � the highest for a benchmark contract since March 2006 - before retreating to 18.24 cents a pound, up 1.4% on the day.

Sucden Financial said that may not be the end of the run.

"Producer type selling has so far kept a lid on any dramatic price rise, but for sure the bulls will now be eyeing the 18.50 level," the broker said.

Cocoa was also favoured, touching 2,922 a tonne in New York � a 10-month high � before settling back to $2,878 a tonne, up 4.6% on the day.

The story here for funds to buy into is one of supplies being tightened by the impact of El Nino on crops, with plantations in Indonesia and Ecuador viewed as particularly vulnerable, combined with demand which may not be quite so sluggish - if economic recovery is as strong as some observers believe.

Strong bean data

While these gains overshadowed most Chicago crops � bar corn � soybeans did their bit, helped by US data showing a crush of 140.2 million bushels in June and weekly export sales of 540,000 tonnes, both better than investors had expected.

Traders also took a positive view of China's high-priced soybean auction, seeing the dearth of interest as leaving buyers in the market for, potentially, US beans.

Chicago's August soybean contract added 11.25 cents to $10.29 � a bushel, with new crop lots doing even better.

November beans, for instance, soared 25.5 cents to $9.33 � a bushel.

Wheat dragged higher

Wheat's weekly export sales were, at 342,000 tonnes considered weak. Nonetheless, with the market in buying mood, some investors were tempted to close shorts, helping September wheat put in a late spurt to stand 2.3% higher at $5.33 � a bushel with forward lots also showing gains of 2%-plus

By Agrimoney.com

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