ICE raw sugar futures steadied on Monday near a 7-month high with the possibility of Indian export incentives capping gains. Arabica coffee futures surged, supported by stronger South American currencies, and cocoa futures were little changed in light volumes. Front-month March raw sugar on ICE traded flat at 13.53 cents per lb at 1357 GMT, after hitting 13.62 cents, its highest since March 6.
Wet weather in top grower Brazil and projections of higher demand for cane-based ethanol, have raised expectations of tightening supplies for the sweetener after years of excess. Claudiu Covrig, senior agriculture analyst with Platts Kingsman, said he believed futures had been over-bought in reaction to last week's gasoline price increase in Brazil. "I don't think the market will spike too much because you have the issues in India," he added, referring to expectations that India could renew sugar export subsidies in 2015/16.
"India is the big bear in the room," Covrig added. ICE December white sugar traded up $2.70, or 0.7 percent, at $386.70 per tonne after touching $387.70, the highest level since February 20. Speculators switched to a net long position in raw sugar on ICE Futures US for the first time since May in the week ended September 29, and held their most bullish position since July 2014, US Commodity Futures Trading Commission (CFTC) data showed on Friday.
ICE December arabica coffee jumped 3.55 cents or 2.9 percent to $1.2785 per lb, after touching a session peak of $1.2830, the highest since August 21. One trader referred to strengthening Brazilian and Colombian currencies supporting arabica futures. Stronger South American coffee-origin currencies erode local currency returns from dollar-denominated coffee sales.
Kash Kamal, senior research analyst with Sucden Financial, said, "On the upside, provided futures can build on immediate support and breach resistance now around $1.30 we could see protracted moves on the upside target $1.35 and then $1.40." ICE November robusta coffee edged up $17, or 1.1 percent, at $1,595 a tonne. The December London ICE cocoa contract dipped 2 pounds, or 0.1 percent, at 2,119 pounds a tonne, after touching a one-month low of 2,116 pounds, basis front month. The December New York cocoa contract was down $12, or 0.4 percent, at $3,083.
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