Sugar eases, focus on October delivery

LONDON: ICE raw sugar futures eased in early trade on Friday, weighed by a firmer dollar as dealers focused on a likely modest delivery tonnage against Thursday's expiry of the Liffe October white sugar futures contract.

Arabica coffee futures firmed, underpinned by a tight physical market, while ICE cocoa eased and traded near 10-month lows on a second-month basis, under pressure from expectations of new main crop harvests in West Africa.

SUGAR

Raw sugar futures on ICE dipped in light dealings as traders focused on the premium of the October contract to March.

The premium was trading around 1.3 cents a lb in early trade, below Monday's peak of more than 2.00 cents but still significantly above last week when it traded as low as 0.57 cent.

Sugar futures appeared to be range bound, hemmed in by downwardly revised Brazilian sugar output projections, a bullish factor, and expectations of large northern hemisphere crops in the fourth quarter, which weighed on prices.

ICE October raw sugar futures were down 0.38 cent or 1.3 percent to 29.12 cents a lb with March down 0.41 cent or 1.45 percent at 27.77 cents at 0832 GMT.

December white sugar futures on Liffe fell $8.3 or 1.2 percent to $709.30 a tonne.

COCOA

Cocoa futures on ICE were slightly firmer, with upside capped by expectations of ample supplies from the coming main crops in West Africa.

ICE December cocoa was up $11 or 0.4 percent at $2,802 a tonne.

Dealers said the market continued to be weighed by abundant supplies following a large global surplus in the 2010/11 season although a much tighter balance is anticipated in 2011/12 with many expecting a small global deficit.

Liffe March cocoa was up 8 pounds or 0.4 percent to 1,851 pounds per tonne.

COFFEE

ICE arabica coffee futures firmed, underpinned by a tight global market, and stood below a four-month high hit earlier this month.

ICE December arabica coffee futures were up 1.6 cent or 0.6 percent at $2.6215 per lb.

Dealers said the market was keeping a close watch on the outlook for next year's Brazilian crop with the key coffee-flowering season starting this month and rainfall needed.

November robusta coffee on Liffe fell $8 or 0.4 percent at $2,040 per tonne.

MARKET NEWS

World shares rose half a percent to one-week highs on Friday while the euro clung to gains from the previous session on hopes that European policymakers would finally come up with a bold plan to combat a deepening debt crisis.

Swiss bank UBS is expected to shrink its investment bank business -- source of a $2 billion rogue trading loss -- and could fire senior executives as it tries to retain worried private clients and avert a ratings downgrade.

The premium was trading around 1.6 cents a lb in early trade, below Monday's peak of more than 2.00 cents but still significantly above last week when it traded as low as 0.57 cent.

ICE October raw sugar futures were up 0.08 cent or 0.3 percent to 29.78 cents a lb with March up 0.03 cent or 0.1 percent at 28.15 cents at 0824 GMT.

Dealers said the premium may remain volatile with options due to expire on Thursday.

China will release another 200,000 tonnes of sugar from state reserves on Friday.

October white sugar futures on Liffe, which expire on Thursday, fell $7.0 or 0.9 percent to $740.00 a tonne.

COCOA

Cocoa futures on ICE were slightly firmer, with upside capped by expectations of ample supplies from the coming main crops in West Africa.

ICE December cocoa was up $8 or 0.3 percent at $2,818 a tonne.

Dealers said the market continued to be weighed by abundant supplies following a large global surplus in the 2010/11 season although a much tighter balance is anticipated in 2011/12 with many expecting a small global deficit.

COFFEE

ICE arabica coffee futures were steady, underpinned by a tight global market, and stood below a four-month high hit earlier this month.

ICE December arabica coffee futures were up 0.2 cent or 0.08 percent at $2.6590 per lb.

Dealers said the market was keeping a close watch on the outlook for next year's Brazilian crop with the key coffee-flowering season starting this month and rainfall needed.

November robusta coffee on Liffe fell $12 or 0.6 percent at $2,074 per tonne.

MARKET NEWS

Stock markets rose for a third day on Thursday and the euro steadied, helped by signs that euro zone leaders are committed to keeping Greece afloat for now.

European banking shares recovered from an initial dip to gain 0.9 percent despite Swiss bank UBS reporting a $2 billion loss caused by unauthorised trading by an employee.

Copyright Reuters, 2011