Raw Sugar Extends Gains on Brazilian Gasoline Tax HikeAlexandra Wexler

 

  NEW YORK--Raw-sugar futures extended their gains on Wednesday, as traders priced in expectations
for higher demand after the government in top grower Brazil raised taxes on gasoline.
  The move, announced Monday, will likely mean higher prices at the pump for Brazilian drivers.
"This should increase demand for ethanol, which can be used as a substitute for gasoline,"
Commerzbank said in a note.
  Higher demand for ethanol could mean processors use more of their cane to make the biofuel,
thereby limiting sugar production and boosting prices for the sweetener, analysts said.
Brazil will raise taxes on gasoline and diesel on Feb. 1.
  Raw sugar for March delivery on the ICE Futures U.S. exchange was recently up 0.3% at 15.88 cents
a pound, after jumping 3.3% on Tuesday.
  "At this point, most fundamental traders continue to expect surplus conditions past (the first
quarter)," said James Cassidy, senior director of the sugar group at Societe Generale in New York.
The International Sugar Organization predicts global production of the sweetener is likely to
outpace demand for the fifth consecutive year in the season ending Sept. 30, 2015.
  The wild card is whether Brazil's crop will get enough rain. "Precipitation levels for January
thus far that are running at 50% of historical averages through much of the center-south of Brazil,"
Mr. Cassidy said. The center-south region grows about 90% of the country's cane.
  Arabica-coffee futures also edged higher Wednesday on worries about whether Brazil would get
enough rain for proper development of the crop. Brazil is the world's top grower and exporter of
coffee.
  Arabica coffee for delivery in March on ICE was recently up 0.6% at $1.6535 a pound, after
tumbling 3.9% during the previous session.
  Cotton for March delivery was recently 0.1% higher at 57.85 cents a pound, while March-delivery
cocoa eased 0.8% to $2,901 a ton. Orange juice for March delivery was 0.6% lower at $1.4565 a pound.