Sugar and coffee surge

Raw sugar futures on ICE rallied for the second straight day on Friday, nearing a nine-month high on a forecast for lower-than-expected output in No 2 grower India and as rains hampered the cane crush in Brazil's main region. Arabica coffee futures also sharply extended gains for the second day, buoyed by short-covering and chart-based buying as they breached moving day averages. Cocoa prices were mixed after an early surge to 4-1/2-year peaks on concerns over lower bean arrivals in West Africa.
March raw sugar on ICE settled up 0.35 cent, or 2.34 percent, at 15.3 cents per lb, supported by a forecast by researcher SGS SA predicting Indian 2015/16 sugar output at a lower-than-expected 23 million tonnes. "The SGS number is very low," a European trade source said. "It raises a question over the likelihood of major exports from India." Rains in center-south Brazilian cane areas, and a slightly firmer Brazilian currency, also helped drive up raw sugar futures, traders said.
Late Thursday, the US Department of Agriculture forecast global sugar output will fall for the fourth straight year in 2015/16, with Brazil's crop pegged down at 35 million tonnes and India down at 28.5 million tonnes. See the full report here: http://1.usa.gov/1v36QFi White sugar also jumped, with March settled up $7.50, or 1.9 percent, at $409.70 per tonne. In coffee, Thursday's rally that was spurred by the sharply lower US dollar continued as the benchmark contract blasted through key levels and shorts took cover.
"We pushed up through moving averages and that inspired technical buying," said one US trader. March arabicas settled up 2.2 cent, or 1.8 percent, at $1.244 per lb, marking a nearly 10 percent rally in two sessions. "The arabica market is pulling up robustas. The funds got very short," a London-based broker said. January robusta futures settled up $9, or 0.6 percent, at $1,572 per tonne, recovering from Wednesday's two-year low.
Cocoa futures extended their run-up over the past six weeks to hit the highest since March 2011, with dealers awaiting Ivorian arrivals data early next week. "There are genuine underlying concerns over risks of tapering arrivals in Ivory Coast and Ghana," one London-based broker said. London March cocoa settled up 7 pounds, or 0.3 percent, at 2,290 pounds per tonne, after touching a 4-1/2-year peak at 2,317. New York March cocoa settled down $9, or 0.3 percent, at $3,368 per tonne, after rising to a high of $3,420.