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Soft futures higher; coffee, sugar rise on Brazil worries

Published 02/27/2014, 07:43 AM
Coffee, sugar futures gain on Brazil weather concerns

Investing.com - U.S. soft futures were higher on Thursday, with coffee and sugar prices gaining as hot and dry conditions in key growing regions in Brazil fuelled concerns over crop prospects.

The South American nation is the biggest grower of both commodities.

On the ICE Futures U.S. Exchange, Arabica coffee for May delivery rose to a session high of $1.7948 a pound, before paring gains to trade at $1.7918 during U.S. morning hours, up 0.85%.

The May contract rose 0.82% on Wednesday to settle at $1.7770 a pound.

Prices of the bean have been well-supported in recent weeks as drought conditions in key coffee-growing regions in Brazil was expected to curb output.

The South American nation had the hottest January ever and the least rain for the period in 20 years, according to agricultural meteorologists.

May Arabica prices rallied to $1.8125 a pound on Tuesday, the most since October 4, 2012.

Meanwhile, sugar futures for May delivery advanced 0.7% to trade at $0.1780 a pound. The May contract dipped 0.06% on Wednesday to settle at $0.1767 a pound.

Sugar prices were boosted by the same hot and dry weather conditions that supported coffee.

Brazil is the world's largest sugar producer and exporter, with the U.S. Department of Agriculture estimating the nation accounts for nearly 20% of global production and 39% of global sugar exports.

Prices of the sweetener surged to $0.1808 a pound on Tuesday, the highest since November 11.

Elsewhere, cotton futures for May delivery rose 1.2% to trade at $0.8739 a pound. The May contract lost 1.12% on Wednesday to settle at $0.8637 a pound.

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