NEW YORK/LONDON: Raw sugar futures on ICE rose on Friday, as expected demand from leading importer Indonesia fed investor buying that lifted the market from the 3-1/2-year low touched two days ago.
Arabica coffee trading on ICE Futures U.S. climbed to a two-month high as producers waited for the market to rise to more attractive levels. Liffe robusta coffee futures rose in a technical correction after falling more than 7 percent from last week's 3-1/2-month high. Robusta gains were limited by expectations of abundant supplies from top grower Vietnam.
Cocoa futures neared their highest level since September 2011, underpinned by deficit expectations and drawing support from the U.S. Federal Reserve's decision to scale back bond purchases.
ICE March raw sugar futures settled up 0.30 cent, or 1.9 percent, at 16.45 cents a lb. The front-month fell to 15.86 cents on Wednesday, its lowest since July 2010. It has risen 3.7 percent from Wednesday's low, it's biggest two-day surge since Oct. 2.
"The 'sugar roulette wheel' has finally 'come up black' and broken the run of 'red,'" said Tom Kujawa, co-head of the softs department at Sucden Financial Sugar.
Michael McDougall of broker Newedge said the rally could stimulate producer selling from Brazil.
"Expect to see origin interest, from Brazil, above 16.50 cents a lb if the real (currency) stays weak," McDougall said.
The world's biggest importer of raw sugar Indonesia issued a permit to import 800,000 tonnes of raw sugar for delivery from December 2013 to February 2014, a trade ministry official said on Thursday.
Also supportive, commodities house Czarnikow on Friday forecast the global sugar surplus would be 2.1 million tonnes in 2013/14, compared with 9.1 million tonnes in 2012/13.
March white sugar on Liffe rose $7.70, or 1.8 percent, to close at $446.50 per tonne, having dipped to $432.10 on Wednesday, the lowest level for the front month since May 2010.
Coffee futures rose, despite abundant global supplies as arabica producers sat on the sidelines awaiting higher prices and some speculators covered their short positions, dealers said.
"We got so cheap that there is no selling interest in cash (markets) unless they get the differential they want," said Jack Scoville, analyst with brokerage Price Futures Group in Chicago.
March arabica futures on ICE rose 1.55 cents, or 1.4 percent, to close at $1.1530 per lb, after touching a 2-month high at $1.1670. The spot contract is up more than 15 percent from the seven-year low at $1.0095 per lb reached in November.
Dealers said top grower Brazil's coming crop may not be as large as first expected as trees struggle to meet anticipated yields, after several consecutive bumper harvests. The Brazilian government, however, upped its estimate for the harvest that ended in October to 49.15 million 60-kg bags from its previous forecast of 47.54 million bags.
Liffe March robusta coffee ended up $22, or 1.3 percent, at $1,706 a tonne, with the upside in prices capped by expectations of supply movement in Vietnam. The rise came after the contract briefly fell below the 100-day moving average on Thursday but settled level with it, triggering some chart-based buy signals.
"We're seeing a technical correction in robustas from the losses we've had this week," said Andrea Thompson, an analyst with CoffeeNetwork, part of INTL FC Stone.
May cocoa on Liffe settled up 19 pounds, or 1.1 percent, at 1,785 pounds a tonne, after touching 1,788, a contract high for the May contract. On the second-position continuation basis, it reached a double-top with the Nov. 20 high, the highest since September 2011.
"London cocoa prices have posted modest gains toward the 1,780 pounds level," Myrto Sokou, a senior research analyst with Sucden Financial Research, said.
"Short term, we expect further consolidation around the 1,770-1,780 pounds area, with prices looking for clear direction. Further gains could focus on the 1,788 pounds level, while modest resistance holds near the 1,800 area."
ICE March cocoa closed up $28, or 1 percent, at $2,819 a tonne.
Deficit concerns have underpinned prices, even as the recent high port arrivals in top grower Ivory Coast, a sign of supply flow, have kept a lid on further gains.
ICE soft agricultural commodity futures and options markets will close early on Tuesday, Dec. 24, and be closed Wednesday, Dec. 25, for the Christmas holiday.
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