Liffe sugar climbs

May white sugar ended $16.00 higher at $519.00 per tonne on Tuesday. Market extended its rebound from last week's eight-month low of $463.40, boosted by a weaker dollar and talk of buying by Iraq and Sudan. May robusta coffee ended $15 lower at $1,356 per tonne in a modest setback after prices had climbed more than $150 from contract lows set a couple of weeks ago.
Market continues to eye potential for defaults and delays in top producer Vietnam. July cocoa on Liffe ended 15 pounds higher at 2,279 pounds a tonne. Market buoyed by prices on ICE futures to a five-week high although gains on Liffe were diminished by the strength of sterling.
Earlier, raw sugar futures on ICE rallied on investor buying on Tuesday, bolstered by a weaker dollar, as the market continued a rebound after hitting nine-month lows last week. Arabica futures on ICE traded at a 2-month high and cocoa rose, supported by the softer greenback.
After surging in late 2009 and into January, sugar prices have nearly halved since hitting a 29-year high at 30.40 cents on February 1. A European broker in a daily report noted talk of Sudanese and Iraqi cash buying of white sugar, which may have contributed to a widening of the May whites-over-raws sugar premium to $118 per tonne, up from a low last Wednesday of $94 per tonne.
The reports of the latest physical buying were a sign that cash buyers were streaming back, having been sidelined amid high volatility as raws prices slid in recent weeks. Raw sugar futures could move in a 16-19 cents a lb range having jumped from last week's 9-month low amid signs of renewed cash buying, Andrey Kryuchenkov of VTB Capital said on Tuesday.
"If we see evidence of more physical buying, we will stabilise here," Kryuchenkov told Reuters. Nick Hungate, executive director with Rabobank, said that while expectations centred on a large cane crop in top producer Brazil, any worsening of the weather could bolster prices. "If that (weather) does deteriorate, that would have an impact," he said.
However, Kona Haque, commodities strategist with Macquarie Bank, saw downside price risk in sugar. "There is still quite a lot of net long positions on the futures market so we've haven't seen the full effect of the liquidation yet," she said.