Sugar falls in London, capping weekly decline

July 28 | Updated: Jul 31 2006, 06:06am hrs
Sugar fell for a fourth consecutive day in London, erasing earlier gains, on speculation global demand will slow, more than making up for increased US imports.

Prices fell 3.2% this week, a third straight weekly drop. They climbed as much as 0.6% earlier on Friday after the US said it will allow more imports because hurricanes last year reduced domestic supply.

Demand is still slowing in Russia, the worlds biggest importer, and China, the second-largest consumer after India, said David Sadler, head of sugar trading at Sucden (UK) Ltd in London.

They both have bumper crops and Russia is set to start its harvest at least a month early in August, he said. White, or refined, sugar futures for October delivery fell $2.50, or 0.6%, to $436 a metric tonne on Londons Euronext.liffe exchange.

The US import quota will be raised by 109,921 short tonne of refined and specialty sugar, the department of agriculture in Washington said on Thursday.

The quota has been lifted five times in less than a year after hurricanes Katrina and Rita damaged crops and refineries in Louisiana and Florida.

The increase in this years quota is a market surprise, said Peter De Klerk, an analyst at C Czarnikow Sugar Ltd in London. The supply will probably come from Central America or otherwise its going to come from Brazil, he said. Brazil is the worlds biggest sugar producer.

Sugar prices have climbed 51% in the past year partly on speculation that dry weather will reduce supply from Brazil.

People in Brazil told me they are expecting good rains over the next week, Sadler said.

Bloomberg