Sugar rebounds

ICE raw sugar rebounded from a six-month low on short-covering on Wednesday, as cocoa futures recovered some of the previous day's losses on renewed investor buying and arabica coffee rose in choppy trade. The benchmark October raw sugar contract on ICE Futures US saw its biggest daily rally in a month. It settled up 0.23 cent, or 1.5 percent, at 15.70 near session highs after dipping to a fresh six-month low of 15.38 cents.
"People are picking bottoms here. They push the market to a new low, and then they get out," said Nick Gentile, managing partner at commodity trading adviser NickJenCapital in New York. US government data due later this week is expected to show that speculators again boosted the bearish stance in ICE sugar contracts during the week ended August 19.
Technically oversold conditions contributed to the short-covering. The front-month's 14-day relative strength index rose to 34.1 from 26.5 previously. The buying frenzy was also fuelled by forecasts of rains in Brazil that threaten to curb harvesting in the world's top producer.
Nearby hefty supplies and weak physical demand have raised expectations of a large delivery against the front-month October contract when it expires on September 30. October white sugar on Liffe closed up $4.80, or 1.1 percent, to $424.90 per tonne, after sinking to $417.00, a contract low and the front-month's weakest level since January. Benchmark ICE December cocoa futures rose $22, or 0.7 percent, to settle at $3,226 per tonne, recovering some of the prior day's losses as it climbed toward a more than three-year high of $3,269 set on Monday.
Cocoa prices have soared on expectations of strong demand. "Even with good weather and good supplies, you still have this bullish mindset that demand will continue to be strong," said Hector Galvan, a senior softs broker at RJO Futures in Chicago. Liffe December cocoa futures ended up 12 pounds, or 0.6 percent, at 2,036 pounds per tonne. In coffee, the benchmark ICE December arabica contract reversed earlier losses and closed up 2.8 cents, or 1.5 percent, at $1.8895 per lb in spread-related, technically-driven trade. In London, November robusta futures gained $22, or 1.1 percent, at end at $1,969 a tonne.