Sugar jumps

Raw sugar futures on ICE surged more than 3 percent on Tuesday, taking back much of the prior week's losses in a flurry of short-covering as the currency in top grower Brazil firmed and rain in the country's main cane region hindered harvest. Cocoa futures were little changed, hovering below 4-1/2-year highs reached last month, while arabica quietly extended losses after Monday's 3.4 percent tumble with rains in Brazil expected to improve the outlook for next year's crop.
ICE March raw sugar futures settled up 0.51 cent, or 3.4 percent, at 15.44 cents a lb. The move caused the March/May spread's discount to narrow for the fourth straight day to as much as 0.45 cent, a contract high. Initial market weakness was spurred by data released late Monday showing speculators had sharply boosted their net long position to the highest since records became publicly available in 2006.
Forecasts for continued rain in Brazil, which will slow mills' pace of crushing and possibly lower the sugar content, combined with the firming real, brought heavy short-covering into the market, traders said. "The fresh fundamental news is strongly in favour of the bulls with heavy rains forecast in early December over harvest areas in center-south Brazil," Thomas Kujawa, co-head of the softs department at Sucden said, adding there were also concerns about dry weather in South Africa and Australia.
Producer hedge-selling was seen taking advantage of the rally, traders said. ICE March white sugar futures rose $11, or 2.7 percent, to settle at $414 per tonne.
For arabica coffee prices, these forecasts for rains in Brazil contributed to a decline in prices as the much-needed precipitation is expected to help cherry development. "One factor weighing on prices is the prediction of further rainfall in key growing areas in Brazil," Commerzbank said in a daily market report. "This will help the coffee berries to develop, which are due to be harvested from April 2016." ICE March arabica coffee futures closed down 0.25 cent, or 0.2 percent, at $1.199 per lb.
January robusta coffee rose $12, or 0.8 percent, to close at $1,490 per tonne, recovering after hitting a contract low of $1,467. London March cocoa settled down $2, or 0.1 percent, at 2,279 pounds per tonne, while New York March cocoa futures finished down $2, or 0.06 percent, at $3,337 a tonne.