ICE sugar and arabica coffee futures rose on Thursday in heavy trading on support from a weaker US dollar, with gains off recent three-year lows capped by expectations of ample supplies from top producer Brazil. ICE cocoa futures posted a fourth straight daily gain in technically driven dealings.
July raw sugar on ICE Futures US rose 0.10 cent, or 0.6 percent, to settle at 16.48 cents a lb in heavy trading, recovering slightly from a three-year low of 16.32 cents a lb hit on Tuesday as a heavy supply outlook from Brazil weighed. The dollar index, which tracks the dollar's value against a basket of currencies, sank. A weaker dollar makes dollar-traded raw materials less expensive for holders of other currencies.
The Thomson Reuters-Jefferies CRB index, a benchmark for global commodities markets, gained. Sugar trading volumes were heavy amid rolling activity. They reached almost 186,000 lots, compared with a 30-day average of fewer than 89,000, preliminary Thomson Reuters data showed.
High open interest in the July contract ahead of its June 28 expiration could indicate a potentially large delivery against the contract, dealers said. Open interest in ICE sugar futures climbed to the highest level in more than five years on Wednesday. August white sugar on Liffe was up $4.70, or 1 percent, to finish at $482.50 a tonne. Dealers noted the widening spread between Liffe August and October, which rose to $12.70 per tonne, as a possible reflection of concerns over whether Mexican exporters will be able swiftly to resolve logistics problems with bagging following a huge harvest.
"The spread had traded a few weeks back into a discount of $3 on the expectation that Mexico sugars would be delivered and potentially Argentine sugars," said Nick Penney of brokerage Sucden Financial Sugar. July arabica coffee futures on ICE added 2 cents, or 1.6 percent, to close at $1.2945 per lb, the front-month contract's largest daily rise since early May.
The weak dollar and short-covering were behind the gains, dealers said. Arabica prices have been pressured by Brazil's abundant off-year crop in its biennial cycle. Volume totalled 46,000 lots, double the 30-day average of about 23,000, preliminary Thomson Reuters data showed. Liffe September robusta coffee finished up $2, or 0.1 percent, at $1,881 a tonne, reversing earlier losses. The contract fell as low as $1,855, the weakest level for the second position since December 2012, pressured by Vietnamese producer sales and weakness in the arabicas market. The ICE July cocoa contract rose $55, or 2.4 percent, to settle at $2,363 a tonne, as a push past technical resistance at $2,340 triggered automatic buy-stop orders, dealers said. Liffe September cocoa closed up 17 pounds, or 1.1 percent, at 1,563 pounds per tonne.
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