ICE raw sugar hit a 4-1/2 month high on Friday due to wet weather in Brazil and expectations of higher demand for cane-based ethanol there. Arabica coffee steadied and cocoa eased. The front-month March 2016 raw sugar contract on ICE Futures US was 0.09 cent, or 0.7 percent, higher at 13.35 cents per lb at 1346 GMT, after touching 13.50 cents earlier, the highest since May 13.
The combination of a Brazilian gasoline price rise, which will boost demand for cane-based ethanol, and wet weather in Brazil hampering harvesting, has spurred sugar futures higher. Prices also found support from news that Wilmar International bought its third straight raw sugar purchase through the exchange, scooping up 1.2 million tonnes against the contract that expired on Wednesday.
"The recent wave of optimism continues and momentum to the upside has bloomed despite some of the leading commodity indexes trending lower," said Thomas Kujawa, co-head of softs at Sucden Financial Sugar. Tracey Allen, a commodities analyst with Rabobank, said the market risked a sell-off after this week's sustained rally. "I personally feel we are, at these levels, over-bought," she said. "Arguably, producers are under-sold."
India's bid to compel producers to export millions of tonnes of surplus sugar will fail without significant subsidies or at least penalties for failing to comply, trade and industry sources said on Friday. ICE December white sugar traded up $4.30, or 1.1 percent, at $382.70 per tonne. ICE December arabica coffee was down 0.5 cent, or 0.4 percent, at $1.2025 per lb.
November robusta coffee on ICE traded up $16, or 1 percent, at $1,572 a tonne, just above the lowest levels in nearly two years touched last month. The market is under pressure from expectations of a big new crop from top grower Vietnam, starting around November. Hamish Smith, analyst with Capital Economics, said weakness in the Brazilian currency in recent months had dragged on arabica coffee futures and indirectly on robustas too. "The weak real has weighed on arabicas, and that has flowed over the robusta market," he said. In cocoa, the December London ICE contract fell 7 pounds, or 0.3 percent, to 2,125 pounds a tonne and the December New York contract dropped $7, or 0.2 percent, to $3,098.
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