Raw sugar hits near seven-week high as cocoa slides

Raw sugar futures on ICE climbed to their highest levels in nearly seven weeks on Tuesday as speculators covered short positions and oil prices rose, while New York cocoa tumbled to a three-week low. March raw sugar settled up 0.41 cent, or 3.2 percent, at 13.16 cents per lb, the highest since Nov. 29. In post-settlement trade, the contract touched 13.19.
Sugar were buoyed by higher oil prices, which were up on a more positive demand outlook. Higher oil prices encourage increased use of cane in Brazil to make biofuel ethanol rather than sugar. Sugar was also lifted by short-covering, dealers said.
The March contract closed above the 200-day moving average for the seventh consecutive session, offering "confirmation that the trend is changing in sugar," one US trader said. "The market is short and now the specs are covering. But now, do they go long? That's the million dollar question," the trader said.
March white sugar settled up $11.30, or 3.3 percent, at $354.80 per tonne, after touching a Nov. 5 high of $355.80. Nordzucker, Germany's second-largest sugar refiner, became the latest European producer to report an earnings slump. March New York cocoa settled down $67, or 2.9 percent, at $2,274 per tonne, after dipping to $2,259, the lowest since Dec. 24.
Prices continued their sell off from a Dec. 31 peak of $2,439 as the technical outlook weakened, dealers said. Selling accelerated after the contract took out the Dec. 26 low of $2,309, dealers said. May London cocoa settled down 18 pounds, or 1.1 percent, at 1,691 pounds a tonne.
Losses were limited by weakness in sterling while expected currency volatility in the coming days kept some potential participants on the sidelines. Market participants were awaiting European grind data for the fourth quarter of 2018, due on Wednesday, with a year-on-year rise of about 3 percent expected. Dealers anticipated North American data, due on Thursday, to be as much as 4.9 percent higher.
March arabica coffee settled down 1.5 cents, or 1.4 percent, at $1.013 per lb. The market was struggling to absorb a huge Brazilian crop, dealers said. The outlook for the 2019-20 harvest an off-year in the country's biennial cycle, is also expected to be favourable. March robusta coffee settled down $1, or 0.1 percent, at $1,527 per tonne.