:. Food Industry News


Sugar Weakens on Bleak Global Economic Outlook

Source: Reuters
20/11/2008

London, Nov 20 - Sugar, arabica coffee and cocoa futures fell on Thursday, tracking losses in oil and other commodity and equity markets, as global economic gloom deepened.

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World stocks hit 5-1/2 year lows and oil hit 22-month troughs on Thursday on worries over bank giant Citigroup and U.S. automakers, though they trimmed losses on an increased Saudi stake in Citi and a Swiss rate cut.

"I am still quite bearish on soft commodities, at least until the end of the year," Romain Lathiere, fund manager with Swiss-based Diapason Commodities Management said.

"We see a very high U.S. dollar and still have lots of worries about the U.S. economy, especially General Motors. If this kind of company collapsed we would see again lots of (investment) outflows in commodities," he added.

March raw sugar on ICE was off 0.08 cent at 11.59 cents a lb at 1604 GMT while March whites in London eased $2.50 to $322.50 per tonne.

However, analysts said sugar market fundamentals were bullish in the medium term due to expectations of widening global deficits in the next few years.

"I am longer term bullish on sugar," said Michael Whitehead, soft commodity analyst with Rabobank.

Global equity markets fell on Thursday, weakened by a raft of weak economic data while chances dimmed that a last minute plan to provide $25 billion to bail out U.S. automakers would receive enough backing to pass before the end of the week.

Arabica coffee futures on ICE also fell in sympathy with losses in other markets.

March arabica futures on ICE was off 2.05 cent at $1.1200 per lb.

Dealers said prices for January robustas in London edged up, however, underpinned by concerns about supply tightness for deliveries against the contract.

January robustas stood $11 higher at $1,817 a tonne while March fell $21 to $1,692 as near-term supply fears saw the former's premium soar to more than $140.

India's Coffee Board has lowered its estimate for total coffee output in 2008/09 by 5.6 percent, citing untimely rains in October in some parts of Karnataka, the largest growing state.

Cocoa prices were lower as the economic gloom helped to stall this week's advance linked to the slow pace of port arrivals at Ivory Coast and diminishing crop prospects at the world's top producer.

Black pod disease, excess rain and administrative problems will slash top cocoa grower Ivory Coast's 2008/09 crop to 1 million tonnes, from 1.36 million tonnes last season, the sector chief said on Wednesday.

March cocoa in London was down 15 pounds at 1,401 pounds a tonne while March cocoa on ICE fell $54 to $2,018 a tonne.



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