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Caning Supplies

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July raw sugar futures on ICE were up 0.54 cent or 2.9 percent at 19.30 cents per lb at 1037 GMT after rising to a peak of 19.42 cents, the highest price for the front month since October 2013. Dealers said rains in the centre-south region of Brazil had acted as a catalyst to spark the sharp rally and investment funds had extended an already record net long position. The slowdown in the flow of sugar from Brazil has come against a backdrop on tightening supplies, with large global deficits widely forecast for both the current 2015/16 and upcoming 2016/17 seasons. "We were waiting so long for the huge deficit forecasts to have any effect but now it is moving to an extent which is amazing," Commerzbank analyst Michaela Kuhl said. "We definitely had some news with these rains and delays in centre-south Brazil but the fundamental situation has not really changed dramatically over the last week." A strong start to the cane crush in centre-south Brazil in April and the first half of May had temporarily ensured there were ample supplies but rains in the second half of last month and early this month have slowed production. "Brazil's cane regions saw more rain on the weekend. Harvest and crush delays are now very likely to extend into the middle of the month," analyst Tobin Gorey of Commonwealth Bank of Australia said. Dealers said the speculative net long had also risen further over the last few days from an already record level with the market's strong upward momentum helping to trigger buying by system funds. August white sugar was up $10.50, or 2.1 percent, at $517.80 per tonne, after touching a contract high of $519.50. Dealers said a strengthening in Brazil's real currency on Friday also provided support for both sugar and arabica coffee prices. The stronger real makes producer sales less attractive in local currency terms.

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