ICE sugar surges

ICE raw sugar futures were mostly higher on Thursday, following mixed harvest data from top grower Brazil, where dry weather aided the cane crush but risked future yields, while the spot contract's discount widened to a four-month low ahead of expiry. Arabica coffee on ICE Futures US was lower, trimming the previous session's gains, while cocoa eased in line with the weaker Thomson Reuters/CoreCommodity CRB Index. The sugar cane crop in Brazil's main center-south region produced more sugar in the first half of June than many expected, but dry weather threatened future yields, data showed on Wednesday.
"It's the ongoing trade-off," said Kona Haque, head of research at ED&F Man. "The dry weather has enabled us to get to a strong level of crushing so that cumulatively we're exceeding last year's pace, but then concerns are never very far away on whether there will be a quick tailing off (in sugar output) because this dryness is definitely not helping the cane yield."
Datagro analysts lowered their forecast for the region's sugar production to 32.3 million tonnes in 2014/15 from the 33.2 million tonnes estimated in March. The ICE July raw sugar contract, which will expire on Monday, settled down 0.15 cent, or 0.8 percent, at 17.57 cents a lb, while most-active October futures ended up 0.12 cent, or 0.6 percent, at 18.73 cents per lb.
July's discount to October widened to a four-month high at 1.11 cents per lb, from 0.88 cents per lb at Wednesday's close, indicating a small delivery. Open interest fell sharply to 27,169 contracts on Wednesday, down 11,020 contracts from the previous session. "Chat around the market seems to be an expectation of a small expiry for the July on Monday," Tom Kujawa of brokerage Sucden Financial said.
Liffe August white sugar closed down 60 cents, or 0.1 percent, at $487.40 a tonne. In coffee, benchmark ICE September arabica futures settled down 1.20 cents, or 0.7 percent, at $1.8085 per lb, trimming the previous session's gains after the market rallied 4 percent. The September Liffe robusta coffee contract closed up $11, or 0.5 percent, at $2,027 per tonne.
In cocoa, ICE September futures closed down $15, or 0.5 percent, at $3,053 per tonne, after prices hit $3,128 last week, the highest level since August 2011. Traders said attention was shifting from West Africa's bumper mid crop to next season's main crop. Liffe September cocoa eased 11 pounds, or 0.6 percent, to end at 1,909 pounds a tonne.