Sugar, coffee gain as index funds rebalance; cocoa, cotton rise

Raw sugar and coffee rose on speculation that investment funds that track commodity indexes will increase their holdings. Cocoa, cotton and orange juice also advanced.

Investors will probably buy 31,451 contracts of raw sugar and 11,148 lots of arabica coffee as weightings shift for the Standard & Poor’s GSCI and Dow Jones-UBS Commodity Index, Morgan Stanley estimates. The changes may bring inflows of $1.5 billion to the sugar, coffee, cocoa and cotton markets, Hussein Allidina, the head of commodities research at the bank in New York, said in a report today.

As the weightings shift this month, “one would think we should at least see some stability” for prices, Michael McDougall, a senior vice president at Newedge Group in New York, said in an e-mailed report.

Raw sugar for March delivery gained 0.7 percent to 18.98 cents a pound at 10:03 a.m. on ICE Futures U.S. in New York. The price tumbled 16 percent last year.

Arabica-coffee futures for March delivery rose 2.1 percent to $1.5045 a pound on ICE, heading for the second straight advance.

Also in New York, cocoa futures for March delivery increased 1.2 percent to $2,246 a metric ton, while cotton futures for March delivery climbed 0.1 percent to 75.12 cents a pound.

Orange-juice futures for March delivery gained 1.3 percent to $1.144 a pound.

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