ICE raw sugar futures turned positive after tapping a 2-1/2-year low on Wednesday, finding earlier support from a firm commodity complex as the US dollar fell, while cocoa traded little changed as rains improved the crop outlook in West Africa. Coffee prices on ICE Futures US and Liffe were mixed, with the market caught between concerns about output and quality in Central America, and expectations for a huge crop in Brazil.
The Thomson Reuters-Jefferies CRB index, a benchmark for global commodities made up of 19 markets, turned down a shade in late dealings after climbing nearly 0.4 percent. A weak US dollar can spur buying of dollar-traded commodities by investors holding other currencies. Raw sugar futures trading on ICE turned higher after inching down to a 2-1/2-year low on follow-through weakness. March raw sugar futures on ICE, which expire on Thursday, settled up 0.05 cent, or 0.3 percent, at 17.84 cents per lb. They earlier dipped to 17.75 cents, the lowest for the front-month contract since August 2010.
The most-active May contract also rose, ending up 0.03 cent, or 0.2 percent, at 18.08 cents per lb. Dealers cited oversupply and slow demand on the physical market, with buyers potentially waiting for a further fall in prices on the back of forecasts for a fourth straight global surplus in 2013/14.
"The problem we've got at the moment is that crops are growing well in most countries," a London-based broker said, noting that top producer Brazil as well as Thailand and India had fared better than expected. The volatile movement of the March/May spread has surprised some dealers, as it moved to a discount on Monday after trading around a 0.30-cent premium last week. Its discount narrowed during the session to around 0.20 cent, from 0.23 cent the previous day. "The weakness in the spread may indirectly provide support for the May (contract) but there is certainly psychological damage as traders wonder what has changed so quickly in the March dynamics," said Michael McDougall, a vice president with Newedge USA, in a daily report on Wednesday.
May white sugar on Liffe closed up $4.60, or 0.9 percent, at $513.40 a tonne. May cocoa futures on ICE settled up $6 at $2,131 per tonne. May cocoa on Liffe inched down 1 pound to finish at 1,426 pounds per tonne, above last week's 10-month low of 1,403 pounds per tonne. ICE May arabica coffee inched down 0.05 cent to finish at $1.4345 per lb, having dipped last week to $1.3760, the lowest for the second-month contract since June 2010. May robusta coffee futures on Liffe settled up $12, or 0.6 percent, at $2,098 a tonne.
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