ICE raw sugar rallied nearly 5 percent and neared a 1-1/2-year high on Wednesday as speculators bought on expectations that the Senate in top grower Brazil will suspend President Dilma Rousseff, supporting the country’s currency.
Brazil is also the biggest producer of arabica coffee, but this market largely shrugged off the country’s political turmoil and the slightly higher real, and inched up to a three-week high. Robusta coffee reached a six-month top.
Cocoa prices fell, bucking the day’s trend in commodities as the 19-market Thomson Reuters CoreCommodity Index jumped for the second straight session and the U.S. dollar fell.
“The expectation for an impeachment vote in the Senate later today is certainly lending a bullish atmosphere to the sugar market,” said Carlos Mera, senior commodity analyst at Rabobank in London.
Rousseff was expected to become Brazil’s first leader in more than two decades to be removed from office as the Senate prepared to vote on whether to try her for breaking budget rules.
“In addition, a slightly wetter outlook in Brazil, although it will support the health of the cane to be harvested later on, is likely to be slightly bullish in the short term as it will temporarily disrupt the harvest in the center-south,” Mera said.
Showers in Brazil’s main center-south sugar region will limit “drydown” efforts through the end of the week and heavier rains next week “may lead to more widespread concerns,” MDA Information Systems reported.
The Maryland-based forecaster also pointed to south-center India, where dryness was expected to remain widespread.
Some traders said ongoing concerns about dry conditions in India’s sugar regions also added to the day’s bullish sentiment.
ICE July raw sugar settled up 0.75 cent, or 4.7 percent, at 16.77 cents per lb, after surging 4.8 percent to 16.80 cents, near the 1-1/2-year high reached on May 5.
August white sugar settled up $14.60, or 3.1 percent, at $479.80 per tonne.
Arabica coffee futures extended gains above the 200-day moving average.
July arabica settled up 1 cent, or 0.8 percent, at $1.2975 per lb, up for the sixth straight day to a three-week high $1.298.
July robusta settled up $11, or 0.7 percent, at $1,671 per tonne after touching a six-month peak of $1,672 on dry weather Southeast Asia.
London July cocoa settled down 23 pounds, or 1 percent, at 2,243 pounds per tonne and New York July cocoa settled down $31, or 1 percent, at $3,070 per tonne.
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