Sugar futures sprang up from negative territory and closed at eight-month highs on Tuesday, with raws extending a four-day rally to the highest level since July 2008 on the coattails of the US corn market. Arabica coffee also rallied while cocoa finished the day mixed.
"When you look at the ethanol connection and the fact that a lot of sugar gets turned into ethanol, when you drive up corn prices that rising tide lifts the boat and tends to lift sugar prices right along with it," said Sterling Smith, an analyst for Country Hedging Inc in Minnesota. March raws soared 0.86 cent or 3.2 percent to settle 27.45 cents per lb, the highest settlement since February 11.
The contract traded in an unusually wide range of more than 1.8 cents, from 25.89 to 27.70 cents, but total volume was around 134,000 lots, just under the 30-day average of nearly 136,000 lots. ICE December arabica coffee futures surged 7.05 cents or by 3.9 percent to close at $1.8570 per lb. ICE cocoa closed down a shade, with the market focused on European and North American third-quarter grinding figures, which are due on Thursday. ICE December cocoa dipped $3 to finish at $2,850 per tonne.
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