Raw sugar futures on ICE surged on Friday, on heavy short-covering and March/May spreading while producer selling took prices off their highs as they made the most of Brazil's weak currency. Arabica coffee futures also rallied, closing the week higher for the first time in a month as forecasts for dry weather in top grower Brazil raised concern.
New York cocoa rose further away from Monday's one-year low as concerns about possible crop damage in parts of Ivory Coast and Ghana following the seasonal Harmattan wind encouraged buying, traders said. The five-day index fund roll began and boosted March/May spread volume in the US markets. Raw sugar futures jumped early in the session after the March contract breached 14.59 cents, the 23.6 percent Fibonacci retracement back toward the January high. Resistance was found at the 38.2 percent retracement around 14.89 cents, just below the session high.
ICE March raw sugar futures settled up 0.1 cent, or 0.7 percent, at 14.51 cents per lb after surging 3.4 percent. They closed the week down 1.9 percent, falling for the third straight week. Total open interest rose for the eighth straight day on February 5. "Demand seems to be back again, especially from China, and Center-South (Brazil) does not have much sugar available on the spot," said Bruno Lima, manager for sugar and ethanol at INTL FCStone in Campinas, Brazil.
"Most of the inventories are committed already." This caused the March/May spread to briefly rise to a 0.02 cent premium for the first time in 11 months. Prices of both sugar and arabica coffee fell from their highs as producers took advantage of the weak currency in Brazil, the top grower for both commodities. March white sugar futures closed up $3.30, or 0.9 percent, at $381.80 per tonne.
Arabica futures on ICE pared steep gains but remained firm on forecasts for dry weather to resume next week in parts of Brazil following below-normal rainfall. March arabica closed up 2.1 cents, or 1.3 percent, at $1.6685 per lb. May robusta coffee futures ended up $11, or 0.6 percent, at $1,965 a tonne. Cocoa rose for the fourth straight day, closing the week up 3 percent, its strongest performance since mid-December. March New York cocoa on ICE closed up $32, or 1.2 percent, at $2,775 a tonne, while benchmark May London cocoa futures ended up 21 pounds, or 1.1 percent, at 1,929 pounds a tonne.
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