By Julie Wernau
Sugar prices erased earlier losses Wednesday to end higher following the news that world oil producers would curb production.
Raw sugar for March delivery rose 0.8% to close at 19.81 cents a pound on the ICE Futures U.S. exchange. In earlier trading, the contract had dropped as low as 19.50 cents a pound but reversed course shortly after the announcement.
OPEC representatives reached a deal to cut the group's oil production by more than 1 million barrels of oil a day to boost crude prices.
Any rise in the price of oil as a result of lower production generally has a bullish affect on sugar prices as sugar producers choose to convert more cane to ethanol to take advantage of higher prices.
Brazilian trade group Unica reported Tuesday that sugar output in the Center South region of Brazil, home to 90% of sugar production in the world's number one producer of sweetener, rose 13.6% during the first half of November to 1.37 million tons.
More cane was converted to sugar over ethanol compared to the previous year, with 46.7% used for sugar production versus 41.7% the year before.
Still the market has been on a steady decline for two months and is down 14% since the beginning of October following a bullish trend that's lasted most of this year.
"The market is still in a liquidation phase and needs some news of demand to trigger a turnaround. However, good demand reports remain hard to find," said Jack Scoville, vice president of Price Futures Group.
Both China and India have been digging in to their own surplus supplies of sugar in spite of poor cane crops, pushing back for the need for imports.
In other markets, cocoa for March was down 1.1% to close at $2,389 a ton, arabica coffee for March lost 1.6% to settle at $1.506 a pound, January frozen concentrated orange juice futures rose 1% to close at $2.176 a pound and March cotton was up 0.4% at the close to end at 71.58 cents a pound.
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(END) Dow Jones Newswires
November 30, 2016 16:53 ET (21:53 GMT)
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