Sugar rises

Raw sugar futures on ICE rallied 3 percent on Tuesday, supported by a recovery in oil and a forecast for a widening global deficit, while arabica coffee steadied along with top grower Brazil's currency. Cocoa prices fell, with the New York market pressured by the weak British pound against the US dollar.
Volume was thin to moderate in the softs markets ahead of a likely rise in US interest rates on Wednesday, which could trigger further strength in the dollar. March raw sugar settled up 0.08 cent, or 0.6 percent, at 14.59 cents per lb, after jumping 3 percent. March white sugar futures closed flat at $401.40 per tonne Traders said sugar prices were buoyed by Platts Kingsman's forecast for the global deficit to increase to 7.8 million tonnes in 2016/17 (October-September), due to higher than expected consumption.
Oil prices edged higher after Monday's slump to near 11-year lows, helping to lift sentiment in overall commodities. The sugar market is increasingly influenced by energy prices as more Brazilian mills allocate more cane to ethanol. Raw sugar futures were also helped by rain in Brazilian cane areas hampering the tail-end of harvesting in the center-south. "In center-south Brazil, seasonal rains continued in the first half of December and are forecast to continue in the week ahead so harvesting remains difficult - for those still operating," said Michael Liddiard of consultancy Agrilion.
Arabica coffee futures followed the gyrations of the Brazilian real while continued rains in Brazil, which help cherry development, limited earlier gains. ICE March arabica coffee finished unchanged at $1.199 per lb. Robusta coffee, on the other hand, edged up as the market consolidated after falling for six straight sessions. November exports in top grower Vietnam were within expectations.
January robusta settled up $5, or 0.3 percent, at $1,480 per tonne. "Momentum indicators still hint to the downside and we could see futures trade under pressure over the coming sessions," said Kash Kamal, senior research analyst with Sucden Financial. "On the downside, any breach of $1,500 could then see protracted losses target the previous low towards $1,475." London March cocoa settled down 14 pounds, or 0.6 percent, at 2,286 pounds per tonne. March New York cocoa settled down $37, or 1.1 percent, at $3,338 per tonne.