London LIFFE white sugar futures firmed at the close on late fund buying and short covering by locals in thin turnover on Friday, traders said.
Front month August closed up $1.2 to $217.7 in volume of 1,362 lots, having moved in a range between $217.7 and $215.2.
October closed up $1.1 at $221.9 in volume of 385 lots, having moved in a range between $222.0 and $219.50. The market edged higher towards the close on a late spurt of fund buying and short covering after spending much of the afternoon mixed.
"The market is very quiet after yesterday's Ascension Day holiday in continental Europe. We have seen some arbitrage selling of London against New York at a whites-over-raws premium of $73."
Another trader said during the afternoon session, "The market could go either way at these volumes. If someone bought or sold 100 lots, it would move the market." The weakening of the Brazilian real currency against the dollar to near 13-month-lows has weighed on the market lately, signalling exporters could accelerate sales.
"We have a long time until the end of the harvest," one trader said, ruling out any immediate upward price pressure in futures from disruptions in the Brazilian harvest caused by rains.
Traders said global physical offtake has picked up this week on the back of falling freight rates as the Brazilian harvest gathers pace.
They noted increasing international demand for the new cane crop from the key central and southern regions of Brazil, quoting June FOB Brazilian crop at 0.3 cents a lb below the New York July raws contract, against Thai at 1.4 cents a lb above July. At these price levels, Brazilian exporters can absorb freight costs and compete in Asian markets, traders said.
Domestic sugar and ethanol prices rose in Brazil this week due to the rain-disrupted start to the centre-south cane harvest and the weakening of the real, traders said.
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