sugar falls on speculation of supplies from brazil

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    Sugar Falls on Speculation of Supplies From Brazil Guatemala

    By Claudia Carpenter and Marianne Stigset

    Nov. 15 (Bloomberg) -- Sugar fell in London on speculation of increased supplies from growers ranging from Brazil, the world's biggest producer, to China, Guatemala and Dubai.

    Refined, or white, sugar for delivery next month was selling for more than the March futures by $48, encouraging growers to deliver supplies to the exchange. White sugar has climbed 4.2 percent this year on reduced exports from the European Union.

    A shipment from Brazil is ``a given,'' said Jeff Bauml, managing director in New York at BNP Paribas SA, the biggest trader of white sugar. ``What wasn't expected was a possible delivery from China and Guatemala and potentially Dubai.''

    Sugar for March delivery dropped 50 cents to $370 a ton on Euronext.liffe. The December contract that expired today ended at $418, down $1.40.

    Contracts due for December delivery correspond to 13 percent of the total open interest contracts for sugar on the exchange today, and 33 percent of total trading volume for the day.

    ``There's potential for a sizeable delivery there as the open interest figure is huge,'' Peter de Klerk, an analyst with C. Czarnikow Sugar Ltd., the world's largest sugar broker, said by telephone from London.

    Australia, the world's third-largest sugar exporter, reported today the spread of sugar-cane smut disease to a second farm near Mackay in Queensland, the biggest grower in the country. The disease, which stunts cane growth and can cut yields by a third, was first detected in Mackay last week.

    The report is unlikely to affect sugar prices because ``people realize there is a lot of product selling from Brazil,'' Chouissi said. ``Without any big participation of the funds, it will be difficult to see any further price movement up.''

    Raw sugar has dropped 20 percent this year on the New York Board of Trade on oversupply, led by Brazil and India. The International Sugar Organization last week raised its forecast for next year's global sugar surplus to 5.8 million tons, from 2.2 million tons.

 
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