Liffe sugar ends higher

Liffe August white sugar closes $13.70 higher at $672.00 a tonne on Tuesday. Market supported by tight nearby supplies, stronger crude oil prices and a weaker dollar. Liffe September cocoa ended 25 pounds higher at 1,861 pounds a tonne. Rise seen as largely a technical correction with market oversold after recent price weakness.
Liffe July robusta coffee ended $8 higher at $2,602 a tonne although market again failed to keep pace with ICE arabica coffee. "We are trading a lot on pure macro events," VTB Capital analyst Andrey Kryuchenkov said, adding people were squaring positions for month-end. The euro climbed to a three-week high against the dollar, global stocks advanced and crude oil rose on Tuesday on expectations that a second financial aid package would be approved for Greece.
ICE arabica prices rose almost 2 percent before paring gains, as outside markets and cold weather in Brazil underpinned the market. "The reason why it's up is the dollar is weaker and oil is up, plus talk of cold weather in Brazil is supportive," a London-based broker said.
Top producer Brazil faces the risk of frost damaging coffee crops typically in July and August, although frosts have occurred in June also. Arabica coffee prices were also underpinned by the shortage of high quality beans after several consecutive below par crops from key producer Colombia. "Coffee has been moving sideways, in a range between $2.64 a lb and $2.68 a lb, where it's found some support," a London-based broker said referring to the ICE July contract.
"I expect it should move up from here," the broker added. Coffee supplies are forecast to remain tight due to production failing to keep pace with steady demand growth, particularly in high quality beans. Sugar prices also edged higher as dealers looked to outside markets to guide investor sentiment. "The recent strength seems more to be associated with technical corrections, prompt supply issues and the general seemingly evergreen strong macro commodity environment," Thomas Kujawa of brokerage Sucden said.
Large crops from key producers including Brazil and Thailand capped upside potential as the world sugar market is expected to shift into surplus. "We continue to be conscious of the expected statistical surplus year and suggest it's safer to sell into rallies rather than buy a dip," Kujawa added.
Cocoa futures climbed on short-covering activity in a bounce after Friday's close lower, said dealers. "The market is consolidating after becoming oversold on Friday," a London-based broker said, adding Ghana hedging activity could have put downward pressure on prices the previous session. Dealers said the market has already priced in the release of stocks from Ivory Coast following months of stalled trade.