Sugar futures rose Tuesday after the International Sugar Organization maintained its forecast that demand for the sweetener will outstrip new supply this year after five years of surplus.
Raw sugar futures for May rose 1.4% to end at 14.86 cents a pound on the ICE Futures U.S. exchange.
“The trade balance (projected export availability versus import demand) is very tight and might result in a physical deficit if there are unforeseen production shortfalls,” the agency said, adding that it expects higher prices.
Meanwhile, Brazilian industry group Unica reported Tuesday that sugar mills continued to crush cane past the usual end of their crushing season. Mills in the center-south region, where 90% of cane is produced in the world’s largest grower, are struggling financially and have continued crushing well beyond the end of the usual harvest to squeeze out more cash.
However, the in the last 15 days of February, the group said, just 13% of the 1.1 million tons of cane crush was used to produce sugar, with the rest going toward ethanol production.
Jason Rotman, principal at Valia Capital Management, a commodity trading adviser in Newport Beach, Calif., said for the past four months, sugar has been in a “buy the dip mode.” Other than a sharp drop in January, prices have stayed above a 200-day moving average that indicates to traders that the contract has reached a new higher floor.
Mr. Rotman said he sees prices rising from 3% to 6% over the next 60 days.
In other markets, cocoa for May fell 1.3% to $2,970 a ton, arabica coffee for May was up 0.7% at $1.217 a pound, frozen concentrated orange juice futures rose 3.6% to close at $1.2225 a pound and May cotton fell 0.9% to end at 56.86 cents a pound.