Kerr Trading International: Commodities, Futures, and Options Trading News and Information

Sweet Something’s

Kevin — Sun, 15 Aug 2010 17:43:49 +0000

Sugar Climbs on Russia, Pakistan Crop Damage; Coffee Gains; Cocoa Declines
By Claudia Carpenter and Yi Tian – Aug 13, 2010 2:39 PM est

Sugar rose to the highest price in two weeks on speculation that Russia and Pakistan may boost imports as adverse weather cut production. Coffee gained, and cocoa fell.

Russia’s raw sugar imports for the year starting Oct. 1 may be 10 percent to 20 percent higher than last season after drought hurt the nation’s sugar-beet crop, according to Raphael Verley, the raw-sugar desk manager at Sucres et Denrees SA in Paris. Pakistan’s deadliest-ever floods destroyed 200,000 acres of cane, the country’s farmer group said.

“The next month’s weather forecast will be crucial,” Verley said. Increased imports in Russia should be “mainly initiated from the first quarter of next year,” he said.

Raw sugar for October delivery rose 0.45 cent, or 2.4 percent, to settle at 19.42 cents a pound at 2 p.m. on ICE Futures U.S. in New York. The closing price was the highest since July 30. Sugar jumped 6.5 percent this week, the fourth gain in five weeks.

Refined sugar for October delivery added 30 cents to settle at $549.90 a metric ton on London’s Liffe exchange at 5:30 p.m. local time.

Pakistan purchased 205,000 tons of imported white sugar on Aug. 9, after securing 320,000 tons five days earlier. Flooding, which started July 22, has “not finished, so damage could continue,” said Michael McDougall, a senior vice president at Newedge USA, a broker in New York.

Arabica coffee for December delivery added 0.05 cent to close at $1.776 a pound at 2 p.m. in New York. The commodity climbed 6.1 percent this week. Robusta-coffee futures for November delivery rose $2, or 0.1 percent, to settle at $1,768 a ton at 5:30 p.m. London time.

Cocoa futures for December delivery slipped $19, or 0.7 percent, to close at $2,885 a ton at 11:58 a.m. in New York, bringing this week’s decline to 4.9 percent. In London, cocoa futures for September delivery dropped 18 pounds, or 0.8 percent, to 2,109 pounds ($3,291) a ton.

Going Against the Grain

Kevin — Fri, 13 Aug 2010 15:38:45 +0000

From Agrimoney.com

Russian ‘panic’ prompts plans for corn imports
“Panic”-stricken Russian corn consumers are planning imports, while Egypt is “aggressively” buying up wheat, reports said, as the fallout of the poor former Soviet Union crop continued its upheaval of the grain trade.

Many Russian livestock farmers are “in a panic and fearful of the situation” because of waning feed supplies, Alex Kholopov, an adviser to the US Grains Council said.

The squeeze reflects a reluctance by grain growers to sell down stocks, hoping that prices elevated by the country’s worst drought on record would get even higher, and despite the export ban which has cut off their access to foreign buyers.

“Some of the top Russian corn consumers believe there will not be enough grain in Russia this year,” Mr Kholopov said, adding that they were “making plans to import corn from other countries”.

Russia, which is attempting to ramp up its livestock industry, has also unveiled plans to release grain from state stockpiles.

Egyptian millers squeeze

The statement followed a revision to US Department of Agriculture estimates which quadrupled to 650,000 tonnes the department’s estimate for Russian wheat imports in 2010-11, and to 700,000 tonnes the forecast for purchases of foreign coarse grains.

And it came as a report from the USDA’s bureau in Cairo flagged the rush by Egypt, the biggest wheat importer, to buy up supplies, despite prices some 50% higher than two months ago.

Private sector buyers, which import some 3m-4m tonnes of wheat a year, were likely to feel “the major impact” of the ban on Russian exports, on which Egypt has increasingly relied.

They typically hold only one-month’s stock, and have “already started to buy from other countries”, notably the US, snapping up 300,000-400,000 tonnes of wheat in the last two-to-three weeks.

‘Moving aggressively’

The state grain buyer, the General Authority for Supply Commodities (GASC), has deeper reserves, of 4m-5m tonnes, sufficient to last about four-to-five months, the bureau said, adding that Egypt’s food security had not been jeopardized by the Russian export ban.

Nonetheless, the authority was “moving aggressively” to replace 540,000 tonnes of Russian supplies cancelled by the export ban.

The government was considering an increase of up to $700m in the budget for purchasing wheat in 2010-11.

“This amount will depend on how much wheat GASC needs to import over the remainder of the June-to-May fiscal year, as well as the prevailing prices in the world market,” the report said.

Shipment cancelled

The cut-off of Russian wheat exports, and the difficulty some merchants are having in finding grain at prices they contracted before the rally, continued to reverberate through the grain trade on Friday.

A European supplier was reported to have cancelled the shipment of 80,000 tonnes of Black Sea wheat to Bangladesh.

Meanwhile, Algeria bought 200,000 tonnes of milling wheat of unknown origin.

On the market prices continued Thursday’s rebound, standing 1.3% higher at $7.23 ½ a bushel in Chicago at 13:45 GMT, and up 1.6% at E216.50 a tonne in Paris.

In London, November feed wheat was 3.1% higher at £159.00 a tonne.

Don’t Be Fooled: Inflation is the Real Problem

Kevin — Wed, 11 Aug 2010 11:27:19 +0000

Kevin Talks to GoldSeek Radio

Kevin — Wed, 11 Aug 2010 01:54:08 +0000

To Download this show in Mp3 format: CLICK HERE

GOLDSEEK RADIO

Kevin Kerr

& Chris Waltzek – Aug. 10, 2010

To Download this show in Mp3 format: CLICK HERE

Breaking News on Corn…

Kevin — Wed, 11 Aug 2010 00:14:44 +0000

BEIJING, Aug 9 (Reuters) – China’s corn supply is expected to remain tight in the coming crop year that starts from October, although output this year is on track to rise from 2009 because of acreage increases, industry participants said on Tuesday.
Recent floods in northeast Jilin province, a major corn producer, were unlikely to have a very negative impact on production as little corn was planted in affected areas, they added.
“The recovery in feedmeal demand and year-end holiday consumption will help to keep prices at high levels despite a possible output increase,” said an analyst with Chicorn Network.
“Chinese users from the feedmeal sector are keen to buy more U.S. corn because of strong demand,” said a corn manager with Cofco’s corn unit.
Chinese importers have booked 1.25 million tonnes of corn from the U.S. so far this year on an output fall last year and a rise in consumption, the largest volume in a decade.
Besides feedmeal demand, government reserve houses were likely to buy a large volume of the crop after the coming harvest to refill dwindling stocks, said analysts.
The government sold a total of 1.04 million tonnes of corn on Thursday during its weekly auction, 66 percent of the 1.58 million tonnes it offered for sale.
Analysts expect corn output in 2010 to rise by more than 10 million tonnes from last year. (Reporting by Zheng Xiaolu and Tom Miles; Editing by Chris Lewis)
2010-08-10 12:20:00

KTI Quote of the day!

Kevin — Tue, 10 Aug 2010 10:31:01 +0000

Kevin Kerr “THERE IS NO MEANS OF AVOIDING THE FINAL COLLAPSE OF A BOOM BROUGHT ABOUT BY CREDIT EXPANSION. THE ALTERNATIVE IS ONLY WHETHER THE CRISIS SHOULD COME SOONER AS THE RESULT OF A VOLUNTARY ABANDONMENT OF FURTHER CREDIT EXPANSION OR LATER AS A FINAL AND TOTAL CATASTROPHE OF THE CURRENCY SYSTEM INVOLVED.”
Ludwig von Mises – …

Some Fan Replies on the KTI Facebook Page

Bill Davis Wow! Scary
Chad Castellanos Human action will open your eyes to reality
17 hours ago · Like ·
Natascha Niffka so you think harry s. dent is right about the stock market heading to 3000?
14 hours ago · Like ·
Kevin Kerr No…but I think a major shift is coming. I think a crisis of confidence of epic proportions is very plausible….(:
13 hours ago · Like ·
Robert Mochwart Very likely. Just came back from a week long seminar at the Mises Institute in Alabama and your sentiments echo those of several of the speakers there.
12 hours ago · Like ·
Natascha Niffka i guess the great boom is behind us
11 hours ago · Like ·
James Krumenacher Great quote…great. Have to remember that one. Says it all in one concise statement…
about a minute ago · Like ·

Crop Conditions, Grain Estimates, and Carryout Forecasts

Kevin — Tue, 10 Aug 2010 01:25:54 +0000

UPDATE 1-U.S. corn, soy ratings unchanged despite heat
8-9-2010 16:11 UPDATE 1-U.S. corn, soy ratings unchanged despite heat
* USDA says US corn crop rated 71 pct good to excellent
* USDA says US soybean crop rated 66 pct good to excellent
* Analysts had forecast corn ratings 70 pct, soy 65 pct
(Updates with figures from USDA, adds new analyst quote)
By Mark Weinraub
CHICAGO, Aug 9 (Reuters) – U.S. corn and soybean conditions
held steady this week, topping forecasts for a 1 percentage
point drop for both crops due to hot weather, the U.S.
government said on Monday.
The U.S. Agriculture Department’s report pegged the corn
crop at 71 percent good to excellent as of Aug. 8, unchanged
from a week earlier. Soybean ratings were 66 percent good to
excellent, also in line with a week ago.
Analysts had been expecting corn ratings of 70 percent good
to excellent and soybean ratings of 65 percent good to
excellent, according to a Reuters poll.
The ratings will provide more fodder for bearish traders
who pushed corn and soybean futures prices near session lows at
the close of trading at the Chicago Board of Trade on Monday.
“Everyone was kind of looking for a little bit of a
decline,” said Chad Henderson, grain market advisor with Prime
Agricultural Consultants in Brookfield, Wisconsin. “It is just
going to put a softer tone (to the overnight session).”
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Reuters Graphic on corn ratings:

http://r.reuters.com/mum95m

Reuters Graphic on soybean ratings:

http://r.reuters.com/qum95m

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
USDA also said that wheat harvest was running behind
schedule at a time when the world was looking for bumper
production from the United States to make up for smaller crops
in drought-stricken Russia.
The U.S. winter wheat crop was 87 percent harvested, below
the five-year average of 93 percent. Spring wheat harvest was
20 percent complete compared with the five-year average of 28
percent.
A week ago, the USDA rated the corn crop 71 percent good to
excellent. Soybeans were 66 percent good to excellent as of
Aug. 2.
Overall, the crops were still in good shape as farmers
prepare for harvest during the next few months.
A year ago, USDA rated the corn crop 68 percent good to
excellent and soybeans were 66 percent good to excellent.
Good-to-excellent ratings for soybeans have fallen from a
high of 75 percent in early June. Corn ratings were down from
76 percent good to excellent during the same period.
Ratings typically peak early in the summer if the crops are
planted in a timely fashion in good soil conditions.
Analysts’ estimates for corn ratings ranged from 68 to 71
percent in the good to excellent categories while forecasts for
soybean ratings ranged from 64 to 66 percent good to
excellent.
(Reporting by Mark Weinraub; editing by Jim Marshall)
((mark.weinraub@thomsonreuters.com; +1 312 408 8587; Reuters
Messaging: mark.weinraub.reuters.com@reuters.net))
((For help: Click “Contact Us” in your desk top, click here
[HELP] or call 1-800-738-8377 for Reuters Products and
1-888-463-3383 for Thomson products; For client training:
training.americas@thomsonreuters.com ; +1 646-223-5546))
Keywords: US GRAINS/PLANTING

RIC: N2_UBMS PNAC: nN09170795
RET GNLN
[Related Stories]

DJ SURVEY: USDA August Corn, Soybean Production Report
July 2009
Average Range USDA Production
Corn (23) 13.282 13.120-13.524 13.245 13.110
Soybeans (23) 3.366 3.290-3.432 3.345 3.359

Yield

July 2009
Average Range USDA Yield
Corn (23) 164.1 162.0-167.4 163.5 164.7
Soybeans (23) 43.2 42.0-44.0 42.9 44.0

Corn Corn Soy Soy
Production Yield Production Yield
ABN Amro 13.284 164.0 3.354 43.0
ADM Inv Services 13.332 165.0 3.432 44.0
AgResource 13.252 163.6 3.432 44.0
AgriSource 13.244 163.3 3.364 43.1
Agrivisor 13.236 163.4 3.373 43.3
Allendale 13.524 167.0 3.345 42.9
Citigroup 13.360 164.9 3.307 42.4
Doane 13.178 163.0 3.350 43.1
Farm Futures 13.470 167.4 3.410 43.8
FC Stone 13.430 165.8 3.428 44.0
Globl Cmd Anlytics 13.206 162.3 3.361 43.2
*Informa 13.448 166.0 3.389 43.5
Kropf and Love 13.325 164.5 3.354 43.0
Linn Group 13.127 162.1 3.331 43.2
Macquarie Bank 13.203 163.0 3.345 43.0
Mdwest Mrkt Solutn 13.300 164.0 3.350 42.0
N. Am Risk Mgmt 13.120 162.0 3.290 42.2
Newedge 13.197 163.3 3.384 43.5
Prime Ag 13.284 164.0 3.354 43.0
Prudential Bache 13.291 164.3 3.362 43.1
Risk Mgmt Comm 13.210 164.1 3.360 43.5
RJ O’Brien 13.170 162.6 3.409 43.7
US Commodities 13.292 164.1 3.345 42.9

-By Andrew Johnson Jr, Ian Berry, and Tom Polansek; Dow Jones Newswires;
312-347-4604; andrew.johnsonjr@dowjones.com

Click here to go to Dow Jones NewsPlus, a web front page of today’s most
important business and market news, analysis and commentary:
http://www.djnewsplus.com/access/al?rnd=xnmeje6ZQHSlWnVB4dAOvw%3D%3D. You can
use this link on the day this article is published and the following day.

(END) Dow Jones Newswires
August 09, 2010 17:11 ET (21:11 GMT)
Copyright (c) 2010 Dow Jones & Company, Inc.
[Related Stories]

SURVEY: August US Grain, Soybean Carryout Forecasts
CHICAGO (Dow Jones)–The following are analysts’ estimates in billions of
bushels for 2009-10 and 2010-11 U.S. grain and soybean ending stocks, as
compiled by Dow Jones Newswires.
The U.S. Department of Agriculture is scheduled to release updated supply
and demand tables at 8:30 a.m. EDT (1230 GMT) Thursday. Parentheses denote the
number of estimates in that average and range.

2009-10

July
2009-10 2008-09
Average Range USDA USDA
Corn (13) 1.459 1.390-1.523 1.478 1.673
Soybeans (13) 0.166 0.153-0.181 0.175 0.138

Corn Soybeans
ADM Inv Services 1.428 0.160
AgResource 1.518 0.162
Agrivisor 1.478 0.175
Allendale 1.453 0.181
Citigroup 1.478 0.165
Doane Advisory Srvcs 1.438 0.165
Farm Futures 1.427 0.153
Kropf and Love 1.428 0.165
Newedge USA LLC 1.428 0.155
N Am Risk Man. 1.478 0.160
PFG Best 1.390 0.165
Prudential Bache 1.503 0.175
US Commodities 1.523 0.175

2010-11

July
Average Range USDA
Corn (20) 1.307 0.970-1.535 1.373
Soybeans (20) 0.334 0.275-0.404 0.360
Wheat (16) 0.982 0.800-1.132 1.093

Corn Soybeans Wheat
ABN Amro 1.350 0.350 1.040
ADM Inv Services 1.260 0.377 n/a
AgResource 1.405 0.404 n/a
AgriSource 1.300 0.350 0.875
Agrivisor 1.264 0.378 0.800
Allendale 1.522 0.366 0.964
Citigroup 1.388 0.282 1.073
Doane Advisory Srvcs 1.075 0.300 1.008
Farm Futures 1.535 0.303 0.930
Global Comm Analytics 0.970 0.329 1.035
Kropf and Love 1.303 0.360 0.947
Macquarie Bank 1.306 0.287 0.980
Midwest Mkt Sol 1.400 0.340 1.010
Newedge USA LLC 1.150 0.290 1.132
N Am Risk Man. 1.148 0.275 0.998
PFG Best 1.295 0.340 0.910
Prime Ag 1.412 0.360 1.043
Prudential Bache 1.394 0.335 0.971
Risk Management Comm. 1.300 0.300 n/a
US Commodities 1.365 0.350 n/a

-By Andrew Johnson Jr., Tom Polansek, and Ian Berry, Dow Jones Newswires;
312-347-4604; andrew.johnsonjr@dowjones.com

(END) Dow Jones Newswires
August 09, 2010 17:33 ET (21:33 GMT)
Copyright (c) 2010 Dow Jones & Company, Inc.
[Related Stories]
strong>CST DJ SURVEY: USDA August Corn, Soybean Production Report
July 2009
Average Range USDA Production
Corn (23) 13.282 13.120-13.524 13.245 13.110
Soybeans (23) 3.366 3.290-3.432 3.345 3.359

Yield

July 2009
Average Range USDA Yield
Corn (23) 164.1 162.0-167.4 163.5 164.7
Soybeans (23) 43.2 42.0-44.0 42.9 44.0

-By Andrew Johnson Jr, Ian Berry, and Tom Polansek; Dow Jones Newswires;
312-347-4604; andrew.johnsonjr@dowjones.com

(END) Dow Jones Newswires
August 09, 2010 17:11 ET (21:11 GMT)
Copyright (c) 2010 Dow Jones & Company, Inc.
[Related Stories]

CST DJ SURVEY: August US Grain, Soybean Carryout Forecasts
CHICAGO (Dow Jones)–The following are analysts’ estimates in billions of
bushels for 2009-10 and 2010-11 U.S. grain and soybean ending stocks, as
compiled by Dow Jones Newswires.
The U.S. Department of Agriculture is scheduled to release updated supply
and demand tables at 8:30 a.m. EDT (1230 GMT) Thursday. Parentheses denote the
number of estimates in that average and range.

2009-10

July
2009-10 2008-09
Average Range USDA USDA
Corn (13) 1.459 1.390-1.523 1.478 1.673
Soybeans (13) 0.166 0.153-0.181 0.175 0.138

2010-11

July
Average Range USDA
Corn (20) 1.307 0.970-1.535 1.373
Soybeans (20) 0.334 0.275-0.404 0.360
Wheat (16) 0.982 0.800-1.132 1.093

-By Andrew Johnson Jr., Tom Polansek, and Ian Berry, Dow Jones Newswires;
312-347-4604; andrew.johnsonjr@dowjones.com

(END) Dow Jones Newswires
August 09, 2010 17:33 ET (21:33 GMT)
Copyright (c) 2010 Dow Jones & Company, Inc.
[Related Stories]

Corn may be next! HEAT IS ON!

Kevin — Fri, 06 Aug 2010 09:16:47 +0000

Ukraine corn harvest faces ‘significant’ downgrade
By Agrimoney.com – Published 06/08/2010

The corn crop in Ukraine, the world’s biggest exporter of the grain outside the Americas, faces a “significant” downgrade because of the mounting heatwave, agribusiness giant Kernel has warned.

The oilseeds-to-silos group said that sunflowers, of which Ukraine was the world’s second-ranked producer last year, had survived relatively unscathed the hot weather which “has intensified of late”, bringing temperatures approaching 40 degrees Celsius.

The sunflower harvest was, provided het and dryness do not persist, on course top reach the 7m tonnes expected by the US Department of Agriculture, whose forecasts set global benchmarks.

However, corn “could be affected” by the weather, Kernel said, adding the USDA estimate of 13.0m tonnes “could be significantly reduced”.

More heat expected

The warning came hours after analysts at UkrAgroConsult cut by 350,000 tonnes to 12m tonnes their estimate for Ukraine’s corn crop, blaming the hot weather, which typically sets back pollination and the process of early grain formation.

“The Meteorological Office forecasts that the heat will last for minimum 10 days,” the Kiev-based group said.

“And grains are still forming on 25-30% of corn acreage and the heat may damage these crops.

“Consequently the yields may decline,” UkrAgroConsult added, cutting its estimate for the Ukraine average by 5% to 4.62 tonnes per hectare, with a figure of about 4 tonnes per hectare expected in Kharkov, Lugansk and Dnepropetrovsk.

Export slump

Kernel added that it expected Ukraine’s wheat harvest to finish up around 18m tonnes, in line with government forecasts, if nearly 3m tonnes below last year’s figure.

Barley output would fall by 1.3m tonnes to 9.5m tonnes.

Exports of the two grains would come in at 10.0m tonnes, excluding any shipments drawn from stocks carried over from last year, the company said.

Shipments from the 2009 harvest reached 15.2m tonnes.

Shares in Kernel, which is an exporter of corn and significant producer of sunflower oil, stood 1.3% higher at 63.00 zloty in morning trade in Warsaw.
© Agrimoney 2010

Corn May be More at Risk to a Wheat Reversal.

Kevin — Tue, 03 Aug 2010 11:22:40 +0000

Agrimoney.com – http://www.agrimoney.com/news/news.php?id=2058

Corn more vulnerable than soy to a wheat reversal
By Agrimoney.com – Published 08/02/2010

Corn, which topped \$4 a bushel for the first time in six months, looks more vulnerable to a price reversal than soybeans, which hit an eight-month high, if wheat’s rally runs out of steam, analysts said.

Corn’s rise to a day high of \$4.04 ½ a bushel in Chicago – the best since January, and representing a rebound of nearly one-quarter in less than five weeks – owed something to fundamentals.

“If you had thought before which crop was most likely to rise, it would be corn,” said Mike Mawdsley, at Iowa-based broker Market 1, pointing to factors including Chinese buying of US corn and the relative paucity of corn stocks, as compared with use, a key input into commodity prices.

America’s corn inventories are set to end 2010-11 at 1.37bn bushels, according to US Department of Agriculture estimates, representing a thin 10.3% of demand. For wheat, the ratio is nearly 50%.

‘The prop’

However, in the main corn’s rise was a spillover from wheat, with the two having some crossover on many uses, such as livestock feed.

Furthermore, it looked like the grains were in the early stages of the battle for plantings for next year’s crop, with many farmers facing soon a decision on sowings, Don Roose, president of US Commodities, said.

“Wheat is the prop. If wheat goes, then corn goes,” he told Agrimoney.com.

And there was the potential for corn yield increases to lift US production, with Nebraska, Wisconsin and part of Iowa appearing on course for records.

Weaker demand

Indeed, look at US rainfall figures through the growing season, and “you could just die” they were so positive, said Darrell Holaday at Country Futures.

Meanwhile, use figures may be revised lower given the impact of high prices on curbing demand, he added.

“The USDA is probably going to have to cut ethanol use by 100m bushels. Then there are low hog numbers, low cattle numbers, so feed use is going to suffer too.”

It was “just wheat” that was helping corn prices. “If wheat breaks \$1 a bushel, corn will break \$0.40 a bushel [lower],” he said.

‘Real issues’

However, prospects for soybeans looked supported by the “incredibly strong” demand from China, which is on course for imports of 48m tonnes of the oilseed in the closing 2009-10 crop year, up 17% in a year, Mr Roose said.

“Of our crop disappoints at all, and if demand stays up, we could be vulnerable” to a supply shortfall which would support prices, he said.

Mr Mawdsley noted the wetter forecasts “across the major growing areas”, which could potentially set back soybean crops.

“We could start to see some real issues,” he said.

* Evening markets: hot day for crops ends on cooler note
* Russia’s woes lift wheat prices above landmarks
* Drought threatens ‘big hit’ to Russian sowings
* Rising sales lift Corn Products’ earnings hopes
* China has begun ‘new era’ of corn imports

Commodities to Watch This Week

Kevin — Mon, 02 Aug 2010 11:07:30 +0000

courtesy of Bloomberg.com

Sugar Rallying as Ships Clog Brazil Ports, India Rains Diminish

By Elizabeth Campbell and Debarati Roy – Aug 2, 2010

The record 122 ships awaiting sugar exports at Brazil’s ports and the 3 percent drop in India’s monsoon rainfall show why Colin P. Fenton expects this year’s worst-performing commodity to rise more than gold.

Vessels outside the six main ports in Brazil waiting to load 3.62 million metric tons are being delayed by wet weather, according to Santos Associados Consultoria Ltda. and shipping company Unimar Agenciamentos Maritimos Ltda. Low inventories in India mean any crop short of forecasts will send prices “markedly” higher, said Hussein Allidina, the head of commodities research at Morgan Stanley in New York.

The 1.7 percent rise in demand this year means the ratio of stockpiles to consumption will drop to a two-decade low of 32 percent, International Sugar Organization data show. While a 22 percent gain in July brought prices close to the year-end estimate of 10 analysts surveyed by Bloomberg News last week, bulls say shortages will push sugar higher. The Philippines, India, Pakistan and Indonesia are “virtually out” of reserves, said F.O. Licht, a researcher operating for more than 130 years.

“A bull market has emerged in sugar,” said Fenton, the chief executive officer of Curium Capital Advisors LLC, a Boston-based researcher on global raw materials, and a former commodity analyst at Goldman Sachs Group Inc. He owns exchange- traded notes linked to sugar futures in New York and expects a 28 percent rally by year end to 25 cents a pound.

Sugar traded on ICE Futures U.S. in New York jumped to a four-month high of 19.67 cents on July 29, compared with the average estimate of 19.75 cents by year end. Gold, which reached a record $1,266.50 an ounce in June, will average $1,200 in the fourth quarter, 1.4 percent more than now, according to the median of 18 analyst estimates compiled by Bloomberg.

Rising Sweetener Costs

Another sugar rally may increase costs for Krispy Kreme Doughnuts Inc. and candy makers Hershey Co. and Tootsie Roll Industries Inc. already hurt by prices that doubled last year.

In 2009, sugar rose the most in 35 years as rain damaged crops in Brazil, the biggest producer, and dry weather curbed output in India, the second-largest. The commodity led gains in the United Nations’ Food Price Index, which rose 20 percent. This year, sugar fell 27 percent, the most among 24 commodities in the Standard & Poor’s GSCI Index, as buyers balked at costs and forecasters predicted a surplus after two years of deficits.

All that changed in the last two months.

Marcos Lutz, the chief executive officer at Cosan SA Industria & Comercio, the world’s top cane processor, said on June 17 that output next year in Brazil’s Center South, the largest growing region, may be lower than this year’s 28 million tons.

Export Logjam

Datagro Ltd., the Sao Paulo-based consultant and researcher, cut its forecast on July 23 for total Brazilian production, estimating 37.5 million tons for the year that began April 1 from 38 million. Unica, an industry group, said July 13 it may lower its forecast.

Trucks carrying sugar in Brazil are waiting as long as 40 hours to unload their cargoes at ports, according to C. Czarnikow Sugar Futures Ltd., which has been publishing market reviews since 1873.

The backlog of ships is more than twice last year’s 46 vessels. Ports stop sugar loading to avoid water damage. Latin America’s largest economy ships 54 percent of the world’s sugar exports, up from 20 percent a decade ago, according to the U.S. Department of Agriculture.

Global demand will be 8.5 million tons greater than output of 158.2 million tons this year, according to ISO’s most recent estimates on May 13. The shortage will be made up from inventory forecast to be at 52.8 million tons on Sept. 30, the group says. Next year, production will rise 9 percent to a record 172.5 million tons, creating a 2.5 million-ton surplus, the ISO says.

Brazilian Ports

Toby Cohen, the head of analysis at London-based Czarnikow, said in a report today that the logjam at Brazil’s ports means that the market’s “return to surplus in the 2010-2011 season may be illusory.”

Buying accelerated as prices slipped from a 29-year high of 30.4 cents on Feb. 1 to a 13-month low of 13 cents on May 7, Morgan Stanley’s Allidina said.

Thailand, the second-largest exporter, bought 74,350 tons of domestic supply on July 13, the first such purchase in more than 30 years. Pakistan is allowing traders to import 500,000 tons without duties until Nov. 30. Indonesia will boost buying before the Islamic holy month of Ramadan starts this month, when consumption peaks, said Stefan Uhlenbrock, a senior analyst at F.O. Licht in Ratzeburg, Germany.

Unexpected Supply Limits

“We’ve got some countries where their crops could also be negatively affected by weather, particularly countries like Thailand and China,” said Leonardo Bichara Rocha, the ISO’s senior economist. “Therefore, the surplus may not be as high as people are anticipating.”

India’s monsoon season, the main source of irrigation that runs from June to September, produced 3 percent less rain than average as of Aug. 1, the Indian Meteorological Department said today. The monsoon was 16 percent below normal in June.

“Output will be higher this year, but not the bumper year people think,” said Kyle Tapley, a meteorologist at Rockville, Maryland-based MDA EarthSat.

The Indian Sugar Mills Association said the crop will rise to 25 million tons next year from 18.7 million tons in the season ending Sept. 30. Maryland-based MDA Earthsat forecasts 20 million tons, while Michael Ferrari at Weather Trends International Inc. in Bethlehem, Pennsylvania, said output will be at least 7 percent less than most estimates.

Crops May Recover

There’s time for supplies to recover because the monsoon doesn’t end for another two months. Prices will drop to 13 cents to 14 cents by the end of the year, said Judith Ganes-Chase, a former Merrill Lynch & Co. analyst who runs a consulting firm in Katonah, New York.

“Bumper crops are expected both from Brazil and India, and if they are translated into reality, there will be a global surplus of about 3-5 million tons,” said Claudio Oliveira, a trader at New York-based Castlestone Management LLC., which oversees $500 million, including sugar futures.

Even after last month’s gains, prices would have to more than triple to get to the 66 cents reached in November 1974.

Futures contracts show traders expect little flexibility in supplies. October sugar traded at a 5.2 percent premium to March futures on July 30. In the week ended July 27, speculators increased bets on rising prices to the highest level since April, data from the U.S. Commodity Futures Trading Commission show.

European Dry Spell

The European Union may produce less sugar because of dry weather, according to Lars Hoelgaard, the deputy director general of agriculture and rural development at the Brussels- based European Commission.

Rainfall in northern France, Belgium, the Netherlands and western Germany was 60 percent to 80 percent of normal amounts in the 180 days through July 5, according to forecaster Martell Crop Projections. That includes the main EU sugar-beet regions.

In the U.S., where the government limits imports to protect domestic growers, deliveries are up 3.4 percent in the six months ended March 31, compared with a year earlier, according to The Sugar Association, a Washington-based industry group whose members including Imperial Sugar Co.

Even though the USDA raised its raw-sugar import quota twice this year, the industry needs at least another 300,000 tons of imports to meet demand, said Tom Earley, an economist and vice president at food and agriculture consultant Promar International.

Krispy Kreme, the second-largest U.S. doughnut chain after Dunkin’ Brands Inc.’s Dunkin’ Donuts, increased prices for some products after a jump in sugar and shortening costs.

Chocolate Costs

“The biggest price increase has been sugar,” Douglas R. Muir, chief financial officer of the Winston-Salem, North Carolina-based company, said in a June 3 conference call. “We have substantially higher sugar costs in the system.”

Hershey, based in Hershey, Pennsylvania, incurred a second- quarter pretax charge of $86.2 million that included rising sugar costs. Tootsie Roll, the Chicago-based maker of Charms lollipops, said in a statement that second-quarter profits fell 18 percent and were “significantly impacted by higher ingredient costs, primarily sugar.”

“Sugar is at a critical state in which marginal shifts in supply and/or demand can create parabolic price movement,” said James Dailey, who manages $145 million at TEAM Financial Asset Management LLC in Harrisburg, Pennsylvania. “Sugar appears to be excellently positioned to make a run at the mid 1970’s high in the next year or two if there are major supply constraints.”

To contact the reporters on this story: Elizabeth Campbell in Chicago at ecampbell14@bloomberg.net; Debarati Roy in New York at droy5@bloomberg.net.