NEW YORK/LONDON: Raw sugar futures on ICE edged up on Thursday on limited short-covering after slumping to the lowest level in nearly three years amid a strong downtrend as expectations of a third year of global surpluses weighed.
ICE arabica futures inched up from the prior session's more than three-year low, while ICE cocoa posted its largest daily loss since January.
July raw sugar on ICE Futures US settled up 0.03 cent, or 0.2 percent, at 16.24 cents a lb after dipping to 16.17 cents, the lowest level for the front month since July 2010.
"The market is in a bearish trend, but we're seeing a little bit of short-covering and some commercial coverage coming in at the low values," said Sterling Smith, a futures specialist with Citigroup in Chicago.
Open interest in the July contract ahead of its June 28 expiration remained high relative to previous years, an indication of a potentially large delivery, dealers said.
Large deliveries are often interpreted as bearish for prices, as the exchange is seen as the buyer of last resort. The May ICE contract delivery was the largest in decades.
A bumper harvest underway in top producer Brazil and expectations of global surpluses have pressured prices.
A shift of Brazilian cane mills toward ethanol production over sugar production will likely continue if sugar prices do not recover, said James Kirkup, head of sugar brokerage at ABN AMRO Markets.
A report earlier this week showed Brazilian cane mills had been favoring ethanol over sugar production. The trend could ultimately support sugar prices if the increased diversion of cane toward ethanol helps erode large sugar supplies.
August white sugar on Liffe was down $1.80, or 0.4 percent, to finish at $473.30 a tonne.
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