Soft futures mixed; sugar rebounds as Brazil ethanol rallies

Soft futures were mixed on Friday with sugar, coffee and cotton on green side, while cocoa marked another day of losses.

On the ICE Futures U.S. exchange, sugar futures for July delivery marked a new daily high at $0.1641 a pound at 13:00 GMT, up 1.17% on the day. The sweetener varied between daily high and low at $0.1641 and $0.1623 respectively. Sugar prices fell to a three-year low of $0.1617 a pound on Wednesday as farmers in Brazil started to accelerate harvesting of the nation’s sugar crops.

Raw sugar rebounded today following speculation that higher ethanol prices in Brazil will make millers use more cane to make the biofuel. Millers in the countrys main growing region, center south, used 58% of the processed cane to make ethanol instead of sugar, up form 52% compared to last year. Brazil accounts for 20% of global sugar production and 39% of the sweetener’s export.

Stefan Uhlenbrock, an analyst at researcher F.O. Licht GmbH, said by phone for Bloomberg: “Ethanol production has picked up quite significantly in the last period of Unica’s report, but it remains to be seen whether this continues to be the case. The market has come down significantly, so it’s more or less natural that there’s some recovery sooner or later, but I’m rather pessimistic that this would be a sustained recovery.”

Elsewhere on the market, arabica futures for July delivery traded higher on the day, standing at $1.2433 a pound at 12:49 GMT. The coffee moved between daily high and low at $1.2463 and $1.2290 a pound respectively.

Robusta coffee was trading recently near its 17-month low level as favorable conditions in Indonesia and Vietnam, its biggest grower, supported developing. According to the International Coffee Organisation, the 2012-2013 arabica production in most countries will jump 5.7%, and robusta output will jump by 8.8%.

Meanwhile, cotton futures for July delivery also traded higher on the day, standing at $0.9210 a pound at 12:54 GMT, up 0.41% on the day. Prices varied between days low at $0.9148 and high of $0.9258 a pound. On Wednesday, the U.S. Department of Agriculture trimmed its cotton crop forecast by 3.6% to 13.5 million bales, compared to its previous estimate of 14 million bales.

Cotton gained 13% this year as global production is expected to slip 4.8% in the season starting August 1, while demand will increase by 2.3%, according to the International Cotton Advisory Committee. Dry weather has been hindering cotton crop developing in the biggest U.S. growing state, Texas. The U.S. Department of Agriculture said in its weekly crop progress report on Monday that 88% of the nation’s cotton crop was planted as of the week ending June 9, compared to 82% in the preceding week. However, this was lower than last year’s 95% during the same week and the five-year average 92% figure.

Elsewhere on the market, cocoa dropped further today, marking a 1.45% loss for the day. Cocoa futures for September delivery traded at $2 273 a ton at 12:57 GMT, varying between daily high and low at $2 308.50 and $2 254.50 a ton respectively.