Oil prices dropped on Tuesday after a top Saudi Arabian source told Reuters production could be fully online within weeks, quicker than initially thought after weekend attacks that halved the kingdom's output. "The relationship between oil and sugar is important with the common denominator between the two markets; ethanol," analyst Agritel said in a market note.
More expensive oil is likely to raise prices of ethanol and heighten the appetite of Brazilian producers for biofuel at the expense of sugar production. Brazil's centre-south (CS) sugar output is forecast to total 26.6 million tonnes in 2019/20, virtually unchanged from 26.5 million tonnes in the previous season, commodities trader Bunge said. December white sugar was down $0.20, or 0.1%, at $321 a tonne.
December arabica fell 1.45 cents, or 1.4%, to $1.0285 per lb. Dealers said coffee areas in Brazil could receive needed rains during the next two weeks, reducing concerns that dry weather could hurt crops in the flowering phase. "A materialisation of the expected good rainfall levels could make the market drop, as the permanent damage (from dry weather) has been very limited," Rabobank said in market note.
November robusta coffee fell $5, or 0.4%, to $1,323 a tonne. December New York cocoa was up $13, or 0.55%, at $2,396 a tonne after rising to a peak of $2,397, the highest for the front month since July 30. Dealers said the market's recent strength was mostly technically driven with the outlook for crops in West Africa remaining largely favourable. December London cocoa rose 7 pounds, or 0.4%, to 1,828 pounds a tonne. Indonesia's cocoa bean imports are seen rising by 5-10% this year from 238,377 tonnes in 2018, the Indonesia Cocoa Association (INCA) said on Tuesday.