Good afternoon and welcome to Markets Desk.
Sugar is getting hit hard today, with New York world sugar down more than three percent and London white sugar touching a one-week low. The catalyst is a sharp four percent drop in gasoline prices, which is dragging ethanol values lower with it. When ethanol weakens, Brazilian mills have less incentive to divert cane toward fuel production, which raises the prospect of greater sugar supply hitting the market — and traders are pricing that in right now.
Moving to cocoa, the picture is the mirror opposite. New York cocoa is up nearly two percent and sitting at a two-and-three-quarter-month high, with London cocoa at its strongest in three months. West African crop concerns are driving this rally, as supply anxiety out of the key growing regions continues to underpin prices and keeps buyers active on any dip.
And in coffee, arabica is under pressure, falling nearly two percent, while robusta is quietly posting a modest gain. The divergence comes down to geography and geopolitics — optimism that the Strait of Hormuz could reopen as US-Iran tensions ease is relieving some of the shipping risk premium that had been baked into arabica, while a stronger Brazilian real is adding additional weight.
That's the tape. Markets Desk, signing off the floor.
