Raw sugar soars

Benchmark raw sugar futures rallied the most in two years on Thursday, surging 5 percent on a recovering real currency in top-producer Brazil, rains in the country's cane belt and a broad-based commodities rally. Arabica coffee on ICE Futures US also gained, boosted by the real and gains across the commodities complex as well as a bullish crop forecast, as cocoa rose.
A US Federal Reserve policymaker said the case for a September interest rate increase seemed "less compelling" than it was a few weeks ago. The comment helped lift global markets, after concerns about an economic slowdown in China sent commodities and equities into a tailspin earlier this week. ICE October raw sugar surged to a 3-1/2-week high of 11.10 cents a lb before settling up 0.53 cent, or 5 percent, at 11.06 cents per lb. The biggest rally since July 2014 lifted sugar from this week's 7-year low of 10.13 cents.
"It's currency (-related), and on the general idea that the worst of the China syndrome is behind us," Jack Scoville, a vice president of brokerage Price Futures Group in Chicago, said of sugar's sharp gains. The Brazilian real saw its sharpest gains against the US dollar since August 10, supporting sugar as well as coffee as it reduces producers' and exporters' local currency returns, discouraging selling.
Gains were further bolstered by options-related buying and longer-term expectations of increasing rainfall in the southern part of Brazil cane belt that could disrupt harvesting, said Michael McDougall, director of commodities for Societe Generale in New York. White sugar futures on ICE for October delivery settled up $8.70, or 2.6 percent, at $342.90 a tonne. Arabica coffee was given a further boost off the previous day's 19-month low by trade buying on supply concerns in Brazil. Dealers said buying intensified after trading house Volcafe forecast the Brazilian crop at 48.3 million bags, down from a previous estimate of 51.9 million bags.
December arabica coffee closed up 2.35 cents, or 1.9 percent, at $1.2455 per lb, recovering from its weakest price since January 2014 struck a day earlier. November robusta coffee rose $26, or 1.6 percent, to settle at $1,641 a tonne. Cocoa futures were also higher. December New York closed up $11, 0.4 percent, at $3,109 a tonne. December London cocoa settled up 14 pounds, 0.7 percent, at 2,094 pounds after nosing to a 2-1/2-week high of 2,099 pounds.