Sugar down, coffee up

ICE sugar futures consolidated above a 20-month low on Tuesday after climbing up from strong support, while Liffe robusta coffee rose for a seventh straight day to its highest level in eight months on strong demand. Arabica coffee also gained, in line with a slightly higher commodity complex while concerns about Greece's outlook kept investors cautious. Cocoa edged higher in choppy dealings.
Raw sugar futures on ICE firmed in thin dealings but gains were limited due to their weak technical chart, after falling 20 percent since mid-March. Also preventing stronger gains was the negative macroeconomic outlook in Europe, as the debt crisis overshadowed strong growth in Germany.
"The markets are now almost discounting a Greek exit from the currency and (are) more worried about knock-on effects on other indebted euro zone countries," said Nick Penney of brokerage Sucden Financial. ICE July raw sugar finished up 0.13 cent at 20.40 cents per lb, having hit a 20-month low of 20.07 cents the previous session. The contract climbed after failing to hit psychological support at 20 cents per lb on Monday, dealers said.
"This morning's minor upward correction appears to lack fundamental backing," a London-based analyst said. London August white sugar put on $8.20, or 1.5 percent, closing at $565.30 per tonne. Robusta coffee futures extended their surge after rising above the 200-day moving average at $2,045 per tonne last week, as demand supported the market.
London July robusta coffee jumped $31, or 1.5 percent, to close at $2,167 per tonne, just off the second position's highest level since September 13, 2011 at $2,168. Arabica coffee futures were slightly higher but still rangebound after hitting a 20-month low last week at $1.7220 per lb.
The divergence in the two varieties' prices is also seasonal to some extent, given top arabica producer Brazil's harvest is starting, whereas in top robusta producer Vietnam it was the tail end of the selling, Haque added. Brazil has started to harvest in some robusta-growing regions, however.
July arabicas on ICE crept up 0.45 cent to settle at $1.7840 per lb, above their 20-month low, basis second month, of $1.7220 touched on May 9. The International Coffee Organisation estimates global coffee consumption grew by 1.7 percent in 2011 though growth was below the average annual rate. ICE cocoa futures firmed, though steady origin selling from top producing region West Africa pushed the market lower sporadically. ICE July cocoa inched up $7 to settle at $2,268 per tonne, while Liffe July cocoa futures ended up 5 pounds at 1,509 pounds per tonne.