ICE raw sugar futures rose on Wednesday, boosted by signs of a pick-up in physical demand following a slide in prices and increased risk appetite among investors linked to stronger financial markets. Arabica coffee and cocoa price also advanced. ICE July raw sugar was up 0.25 cent or 1.8 percent at 14.16 cents a lb by 1533 GMT while Liffe August white sugar was up $12.20 or 2.7 percent at $463.40 per tonne.
July cocoa on ICE was up $4 or 0.1 percent at $2,955 a tonne. July cocoa on Liffe was up 12 pounds or 0.5 percent at 2,285 pounds a tonne. Coffee futures also rose, although the prospect of a record Brazilian crop in 2010/11 appeared set to limit the upside potential, dealers said.
ICE July arabica coffee was up 1.70 cent or 1.25 percent at $1.3785 per lb. Liffe July robusta coffee rose $8 or 0.6 percent to $1,406 per tonne. "We have seen some progress in Europe. Plans to deal with fiscal difficulties have provided a boost for broad-market confidence," said Barclays Capital analyst Nicholas Snowdon. On Friday, raw sugar posted an unprecedented 12th weekly loss, weighed down by expectations of large supplies of the sweetener and worries of spreading debt woes from Greece, in a correction from a 29-year peak of 30.4 cents a lb on February 1.
Dealers noted the drop in prices had sparked increased demand from a range of buyers including India and Pakistan. "There is still some tightness there," said Jake Weatherall, a soft commodities trader with Rabobank. Dealers said supplies were likely to be more plentiful in 2010/11 with the global set to swing into surplus.
A global sugar surplus of 2-3 million tonnes is forecast for 2010/11 after a deficit of 8 million tonnes in 2009/10, Lindsay Jolly, a senior economist at the International Sugar Organisation told Reuters Insider television on Wednesday. Cocoa edged up, underpinned by gains in other commodity markets, as the market looked to rebuild after a sharp setback in the last few days. Prices had surged to a 32-year high in London earlier this month on the back of stronger-than-expected first-quarter North American grind data, a key measure of demand.
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