October 18, 2013 / 2:48 PM / 4 years ago

SOFTS-ICE sugar soars as Brazil fire reignites supply worries

4 Min Read

* Fire threatens 20 pct of port's monthly exports

* Repairs could take 6 months: analyst

* Cocoa slips as investors take profit after inline N.A grind data

By Marina Lopes and Sarah McFarlane

NEW YORK/LONDON, Oct 18 (Reuters) - Raw sugar futures spiked to a one-year-high on Friday after a fire engulfed four warehouses in Brazil's Santos port, jeopardizing a fifth of monthly exports from the top producer's main terminal.

Cocoa prices fell to profit-taking after the market's recent rally to two-year highs, while coffee came under pressure.

After the news broke that an estimated 300,000 tonnes of sugar owned by Copersucar, the world's No. 1 producer, went up in flames, traders rushed to cover short positions, sending prices up 6 percent to a one-year high of 20.16 cents a lb in early New York hours.

ICE March raw sugar futures closed up 0.50 cents, or 2.5 percent higher, at 19.50 cents per lb. The front-month premium over the May contract almost doubled from the previous day, to 0.28 cent.

The news electrified an otherwise steady softs complex with over 360,000 contracts, equivalent to over 18 million tonnes of raw beet or cane, changing hands by noon. That's more than triple the 250-day average, according to Reuters calculations.

The fire is the latest setback to top-grower Brazil, where rains have plagued a record harvest. Fears about sugar availability in the short term have already driven up prices in recent months even as the global market has a surplus.

Copersucar, which controls one-fifth of the world's sea-born trade in sugar, had already reduced its 2013/2014 harvest projections because of the rain.

One analyst estimated repairs to the newly expanded port could take six months.

"If the fire damages the ship-loading equipment, this is where there is a much bigger problem. The loading facility is much more significant to the global market than the loss of the sugar," Czarnikow Director Toby Cohen said.

December white sugar on Liffe closed up $7.50, or 1.4 percent, at $513.80 a tonne.

Cocoa Trims Gains

Cocoa futures on ICE slumped to their lowest in nine sessions as investors locked in profits after prices surged to a two-year high on Thursday.

Upbeat third-quarter Asian grinding data bolstered expectations of growing demand for chocolate's main ingredient.

North American data released after the market close on Thursday rose 8.25 percent, in line with expectations, and added to the optimism.

ICE December cocoa settled down $46, or 1.9 percent, to $2,721 a tonne. Dealers said the market had been due for a correction, having risen nearly 30 percent in the past four months.

"It seems that the trade is not looking to keep all its longs on the table before the weekend," said Hector Galvan, senior softs broker at RJO Futures in Chicago.

The broadly higher pace of Asian, North American and European grinding prompted some to say that the International Cocoa Organization's August estimate that global 2012/13 grindings would rise 1.1 percent could need revising higher.

Liffe March cocoa futures settled down 37 pounds, or 2.1 percent lower, at 1,721 pounds per tonne.

In robusta coffee, Liffe January futures closed down $15, or 0.9 percent, at $1,618 a tonne.

"Most of the volume today is spread-based," said a London-based broker.

December arabica coffee futures on ICE closed down 0.5 cent, or 0.4 percent, at $1.1465 per lb.

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