Raw sugar, arabica see biggest rally in two weeks

Raw sugar posted its largest gain in two weeks on Thursday while US cocoa closed not far from 32-month highs on worries that weather anomalies could disrupt output in both crops. Arabica coffee, like raw sugar, had its biggest rally in two weeks after moving into a technically stronger area and benefiting from lingering concerns about production losses from a Brazilian drought.
Raw sugar broke past the 17.5 cent a lb barrier in New York, in its strongest run since May 14. "The market bounced off (from) a good technical point and is attracting long side fund sponsorship," said Sterling Smith, futures specialist for Citigroup in Chicago. The dry weather that has wilted much of Brazil's coffee was believed to have damaged sugar too, Smith said. "There are concerns that the cane will have lower sugar content."
The front-month and most-active raw sugar contract on ICE Futures US, July, closed up 0.37 cents, or 2.2 percent, at 17.48 cents a lb, after touching a session peak at 17.57. But some, like Nick Penney at London's Sucden Financial Sugar, said the rally will not go on without a strong fundamental reason to compel investors to keep buying sugar. In London's white sugar, the front-month August contract ended up $5.80, or 1.3 percent, at $473 per tonne.
Cocoa was pushed upward on concern that the El Nino weather phenomenon could affect crops in West Africa before the arrival of the main harvest in that region, as demand for chocolate was picking up along with the global economy. Cocoa's New York-traded July contract on ICE finished up $17, or about 0.1 percent, at $3,046 per tonne. On Tuesday, ICE's second-month position in cocoa, September, hit a 32-month peak of $3,060, reflecting the market's belief in a smaller or delayed main crop out of West Africa.
September cocoa on London's Liffe closed up 10 pounds, or 0.6 percent, at 1,921 pounds per tonne. In coffee, arabica's July contract on ICE ended up 5.8 cents, or 3.1 percent, at $1.8195 a lb, and after a session peak at $1.8235. It also was the market's biggest percentage gain in a day since May 15. Arabica for September, the second-month contract on ICE, finished up 5.8 cents, or 3.1 percent, at $1.84 per lb. July robusta coffee futures jumped $42, or 2.3 percent, to close at $1,949 per tonne.