ICE raw sugar futures climbed on Friday, boosted by wet weather disrupting the tail end of the harvest in top grower Brazil, while coffee futures also jumped, sharply raising arabica's premium over robusta. Cocoa markets traded mixed. Sugar futures gained after wet weather in some of Brazil's key cane-growing areas, with more rain forecast in the coming days.
"People are assessing how much crushing has been lost in the last 24 hours and how much will be lost over the next 72 hours, as rain is forecast to hit the central Sao Paulo cane-growing regions around Aracatuba," a London-based analyst said. "The dry period is over and now we're starting to see the rain, and it's just a matter of how many days' rain we see over the balance of the crop" as to whether current sugar production estimates will be met, the analyst said.
ICE October raw sugar futures gained 0.17 cent, or 0.9 percent, to settle at 19.38 cents per lb, but closed the week down 2.7 percent. The anticipated global surplus kept the market near a two-year low of 18.81 cents, touched on September 6. March raws ended the day up 0.16 cent, or 0.8 percent, at 20.07 cents per lb. "We expect resistance in March at 20.50 and heavier at 21 cents as producer hedging kicks in at these levels," Nick Penney at brokerage Sucden Financial said.
Michael McDougall, a senior vice president for brokerage Newedge USA, said the first significant rain in months on Thursday caused 40 to 50 percent of the mills in Brazil's Sao Paulo and Parana regions to shut down. "However, since rain is expected to be greater than normal for the next two weeks, we expect to see more stoppages, and those that had projected their crush numbers thinking rain was not going to return this year will have to re-work those final numbers again," McDougall said in a daily report.
Brazil's sugar industry association Unica cut its forecast for 2012-13 sugar and ethanol output on Thursday but said it expects a larger overall cane crop thanks to rains earlier this year. December white sugar on Liffe rose $3.90, or 0.7 percent, to $560.90 per tonne.
Arabica coffee futures continued consolidating on both sides of their 100-day moving average after last week's short-covering rally, with dealers noting the large Brazil crop was likely to cap gains. ICE December arabica coffee futures rose by 4.70 cents, or 2.8 percent, to end at $1.7330 per lb, above the 100-day moving average at $1.7290. The move lifted their premium over robusta futures to nearly 81 cents per lb, after falling sharply in the previous session to roughly 76 cents per lb.
NYSE Liffe certified robusta stocks dropped below 130,000 tonnes by September 17. November robusta coffee futures closed up $42, or 2.1 percent, at $2,083 a tonne. ICE December cocoa futures inched up $2 to settle at $2,521 a tonne. Liffe December cocoa ended down 9 pounds at 1,626 pounds per tonne. International Cocoa Organisation statistician Laurent Pipitone said ICCO expects a global cocoa deficit in 2012/13 as a lack of rain in West Africa curtails supply.
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