White sugar prices soared to a 21-month high on Wednesday, propelled by nearby supply tightness, surging crude oil and a weak dollar. Cocoa and coffee also advanced with renewed fund buying interest evident in soft commodities after the setbacks of the last few weeks. "We are definitely seeing more fund activity.
Funds are looking to pick up some good bargains," said Abah Ofon, soft commodity analyst at Standard Chartered Bank in Dubai. October white sugar on Liffe was up $10.5 at a contract high of $423.0 a tonne at 1444 GMT. The peak was the highest level for the front month since mid-November 2006. Ofon said sugar had been aided by renewed strength in the crude oil market and a more balanced outlook on fundamentals.
"The market is now looking at sugar as a long-term play. Despite the fact we are still in surplus, the fundamentals are improving," he said. Dealers noted that front month October whites had moved to a premium to December after trading at a small discount on Tuesday. The October contract expires on September 15. Raw sugar futures on ICE were also higher with October up 0.27 cents at 14.35 cents a lb.
Philippine sugar output for the next crop year starting September is expected to drop about 8 percent from a 24-year high amid higher costs of fuel and fertiliser, a senior official said on Wednesday. Cocoa prices rose to the highest level for nearly two months with crop concerns helping to trigger gains. "We are approaching the start of the season in West Africa and I think there are lingering concerns about the weather and about crop disease in Ivory Coast and Ghana," Ofon said.
December cocoa futures in London were up 28 pounds at 1,658 pounds a tonne after rising to a peak of 1,672 pounds, the highest level for the benchmark second month since July 3. ICE December cocoa rose $79 to $2,963 a tonne. Another key producer, Indonesia, has also seen disease reduce the crop outlook.
The International Cocoa Association has cut Indonesia's 2007/08 cocoa output by 16 percent from an earlier forecast to 480,000 tonnes due to a fungal disease. December arabica futures on ICE were up 3.15 cents at $1.5110 per lb while November robusta futures on Liffe were $27 higher at $2,385 a tonne.
Comments
Comments are closed.