New York: The price of sugar rose on Wednesday, hovering at levels not seen in 28 years, as concerns about a global sugar shortage escalated.
Other commodities gained broadly on a weakening US dollar.
The October contract for sugar, which expired on Wednesday, rose 0.66 cent to 24.12 cents per pound on the Coffee, Sugar and Cocoa Exchange. Sugar for March delivery, which will now become the actively traded contract, jumped 0.45 cent, or 1.8%, to 25.39 cents a pound.
Sugar has been on a steady climb since the end of last year as production suffered amid poor weather and bad crop conditions. And the outlook hasn’t improved this year.
“We’re seeing a massive world production deficit for a second year in a row,” said Tom Mikulski, senior market strategist at Lind-Waldock, a futures broker.
A drier than normal growing season in India and too much rain in Brazil have hurt the crops in two of the biggest sugar producing countries. “If their production is down or their crops are in horrible condition, the world feels it,” Mikulski said.
The pace of sugar’s advance began to pick up speed in May and accelerated in August, when its price spiked 31%. On 1 September, sugar hit 24.85 cents a pound, its highest level since February 1981. Analysts expect prices to keep moving higher in the near term, so long as the weather is adverse in sugar-producing countries.
Among other soft commodities on Wednesday, cocoa, coffee and cotton also rose. Orange juice prices fell.
Meanwhile, on the New York Mercantile Exchange, gold prices settled back above the $1,000 (Rs47,900) mark for the first time in a week as the dollar fell against other major currencies. Gold is often used as a hedge against inflation, which can be triggered by a falling dollar.
Gold for December delivery rose $14.90 to $1,009.30 an ounce. Other precious metals also moved higher. December silver jumped 48 cents, or 3%, to $16.6580 an ounce, while October platinum rose $24.70, or 2%, to $1,295.60 an ounce. Palladium prices rose 3.2%.
December copper futures rose 9 cents, or 3.3%, to $2.8190 a pound.
Elsewhere on the Nymex, oil prices surged about 5% after a US government report said the nation’s petrol supply dropped unexpectedly last week and demand increased from last year. Still, petrol supplies are nearly 11% higher than they were last year.
Light, sweet crude for November delivery rose $3.90 to $70.61 a barrel.
Natural gas gave up 3.4 cents to settle at $4.841 per 1,000 cu. ft. Grain prices rose on the Chicago Board of Trade.
December wheat futures recovered from an early drop to finish up 10 cents at $4.5750 a bushel, while corn for December delivery rose 3 cents to $3.44 a bushel.
November soyabeans added 10 cents to $9.27 a bushel.