Raw sugar recovers from 2-1/2 year low though more supplies lurk

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LONDON, April 16 (Reuters) – Raw sugar futures on the ICE exchange recovered from a 2-1/2 year low on Wednesday, helped by a steadier tone in wider financial markets, though prospects for improved supplies of the sweetener kept gains in check.

* Raw sugar was up 1.5% at 17.79 cents per lb by 1532 GMT, having earlier matched Tuesday’s 2-1/2 year low at 17.51 cents, while white sugar was up 1.3% at $496.60 a ton.

* Oil prices rose as reports of potential U.S.-China talks calmed trade war fears. Higher energy prices can encourage mills in Brazil to divert more cane for ethanol production at the expense of sugar.

* On the downside though, India is likely to see above-average monsoon rains for the second straight year in 2025, the government said. Dealers said the rains should allow the world’s No. 2 sugar producer to increase sugar exports.

* Meanwhile sugar production in top producer Brazil’s centre-south region was nearly 10% higher than a year earlier in the second half of March as mills allocated more cane to sugar production.

* Consultancy Safras & Mercado said the increased allocation to sugar came about as sugar stocks in Brazil’s centre-south were about 70% lower than average in the first quarter.

* Arabica coffee rose 2.1% to $3.7470 per lb, having lost 2.7% last week amid tariff-related trade war and recession fears, while robusta coffee rose 1.4% to $5,416 a metric ton.

* Dealers said robusta is being boosted by reports of sharply lower robusta production out of Brazil, the world’s second-largest grower of the instant coffee ingredient.

* Safras & Mercado said Brazil’s production could be a bit bigger than expected in 2025. It, however, estimates farmers have sold only 14% of the new crop versus a 25% long-term average due to ongoing jitters over output prospects.

* London cocoa rose 0.7% to 5,846 pounds per metric ton, having lost 2.8% on Tuesday, while New York cocoa rose 0.8% to $7,991 a ton.

* Cocoa investors continue to fear a downturn in demand for the chocolate ingredient, with first-quarter cocoa grind data – a measure of demand – likely to show steep falls of between 5% and 7% on Thursday, dealers said.

* Brazil’s cocoa grind fell 13% in the first quarter, though the decline was partly due to a lack of supplies and not just poor demand, dealers said. (Reporting by May Angel; Editing by Kirsten Donovan and David Holmes)