NEW YORK/LONDON: Raw sugar futures on ICE climbed on Friday, heading for their largest weekly gain in a month, underpinned by a slow start to Brazil's harvest caused by rain and heavy trading of the May/July spread.
Cocoa hit multi-month highs on short-covering, while arabica coffee fell amid mixed trading.
Delays to the early stages of the harvest in top sugar grower Brazil supported the front-month contract. Its premium has widened to 0.19 cent over July <SB-1=R> from near level money a week ago.
That was the highest premium the spot-month contract held to the second month since February.
May raw sugar futures rose 0.24 cent, or 1.35 percent, to 18.08 cents a lb by 12:37 p.m. EDT (1637 GMT). The front-month contract has been inching up from a more than 2-1/2-year low of 17.47 cents touched earlier this month.
July raw sugar contract rose 0.1 cent, or 0.56 percent, to 17.89 cents a lb.
"Harvest delays are limiting the downside here," said Andrey Kryuchenkov, an analyst at VTB Capital, adding that this was likely to provide only temporary support, however, and the market outlook was still bearish amid expectations of record global production.
Heavy rain in Brazil's cane belt has slowed early progress of the cane harvest, a job made harder by tough, older cane left over from last year that still has to be gathered, a meteorologist and forecaster said.
The market gained some additional support on Friday from a "risk-off" day, said Nick Gentile, senior partner of commodity trading consultancy Atlantic Capital Advisor.
The benchmark Thomson Reuters-Jefferies CRB and world financial markets were down.
Investors' desire to take risk off the table amid global economic concern induced short-covering in some markets where speculators hold bearish positions, he said.
May white sugar on Liffe was up $5.40, or 1.04 percent, at $522.90 a tonne.
COCOA BUILDS ON GAINS
July cocoa on ICE settled up $23, or 1 percent, at $2268 a tonne, after hitting $2,276, the second-month contract's highest level since late January.
The second-month contract was up more than 5 percent from last week's close, its largest weekly gain since early September.
A strong technical picture, as cocoa passed resistance earlier this week at $2,200 per tonne, had triggered further short-covering, dealers said.
"I think it's caught a lot of people by surprise because there is a lot of bearish talk out there," a London-based broker said, referring to expectations for a large West African mid-crop and a fall in Europe's quarterly grind data, an indication of demand.
Dealers and analysts expect a fall in Europe's first-quarter grindings data, due to be published by the European Cocoa Association on April 17.
Liffe July cocoa futures were up 16 pounds, or 1.1 percent, to close at 1,504 pounds a tonne after earlier hitting 1,512 pounds, their highest level since Dec. 19.
ICE July arabica coffee futures were down 1.75 cents, or 1.3 percent, at $1.3740 per lb in range-bound trading, heading for a weekly loss.
The second-month contract hit a 33-month low of $1.3405 per lb hit on March 18 on pressure from expectations of hefty Brazilian supplies.
Starbucks Corp on Friday said it would cut grocery list prices on its namesake and Seattle's Best packaged coffee by 10 percent or more on May 10 as coffee costs fall and it fights for sales in supermarkets and other retailers.
In top robusta producer Vietnam, dealers said rains should ensure another large crop. although prices on the physical market remained firm as farmers withheld beans from the 2012/13 harvest in the hope of price increases.
"There's plenty of coffee around. It's a question of whether you want to pay for it," a London-based broker said. "Vietnamese sellers are trying to hold off."
The July robusta coffee future on Liffe closed up $21, or 1 percent, at $2,069 a tonne.
<Center><b><i>Copyright Reuters, 2013</b></i><br></center>
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