London white sugar futures rose on Monday, buoyed by news of Egyptian physical offtake, and robusta coffee touched an 8-1/2-month peak supported by low European stocks, while London cocoa was steady in thin volumes. Soft commodities were supported by a weaker dollar against a basket of other currencies, although trade remained light as US markets were shut for a Memorial Day holiday.
A softer greenback makes dollar-denominated commodities cheaper in terms of other currencies. London August white sugar was up $3.50 to end at $561.20 per tonne. "Volumes are really light today," one broker said. "We're probably seeing a mix of spec and trade buying."
ICE raw sugar futures recently traded at 21-month lows, pressured by expectations of a large global surplus of the sweetener. Front-month raw sugar on ICE touched a 21-month low of 19.36 cents a lb on May 23. The commodities and financial brokers Marex Spectron said it saw potential downside price risk in sugar. "In the medium term, prices are condemned to go lower, even much lower," it said, referring to pressure from the global sugar surplus.
"As for the short term outlook, this will probably depend on the two sugar currencies," it added, referring to the currencies of the world's leading sugar producers, Brazil and India. A weak real and rupee have acted as an incentive for producers in Brazil and India to sell sugar despite weak prices, because the sweetener is denominated in dollars. Dealers said the market was tracking physical offtake, as buyers took advantage of low sugar prices.
"Any sign of demand for sugar should be helping futures prices," said Keith Flury, senior soft commodities analyst with Rabobank. Egypt's state-owned Sugar and Integrated Industries Company (SIIC) said on Monday it bought 50,000 tonnes of raw Brazilian sugar in a tender.
Macquarie Group Ltd will acquire 42.5 percent of commodities house Czarnikow from Wilmar International Ltd, which will cease to be a shareholder, Czarnikow said on Monday. Robusta coffee futures edged higher, supported by low stocks in Europe, as dealers noted technical momentum to the upside based on historical price charts. "It's no great surprise there's continued strength in the market," said a London-based broker, adding he expected July to test $2,295-$2,320 a tonne.
July robusta coffee futures rose $6 or 0.3 percent to end at $2,247 a tonne having earlier touched $2,269, the highest level basis second month for 8-1/2 months. "There's a lot of speculative motion in there on anticipation of tightness in the market," Flury said. Arabica coffee futures on ICE recently traded at a 21-month low, weighed by expectations of a big harvest in top producer Brazil. Second month arabicas on ICE touched a 21-month low of $1.6740 a lb on May 23.
London September cocoa ended 2 pounds or 0.1 percent higher at 1,470 pounds per tonne. "Despite New York being closed the market is quietly steady," said a London-based broker. Speculators trimmed net long positions in cocoa, while extending the next long in robusta coffee on NYSE Liffe in the week to May 22, exchange data showed on Monday.
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