Sugar slides

Raw sugar futures on ICE slid 3 percent in heavy volume to the lowest in nearly four months on Thursday, pressured by chart-based selling and weak cash prices, pushing the spot spread to a discount for the first time since September. While tumbling sugar prices bucked the firm tone in other major commodity markets, cocoa futures prices benefited from the broad based rally, rebounding up from multi-month lows.
Coffee prices were mixed. Raw sugar futures fell for the fifth straight session, extending losses sharply after dropping below key technical support at 13.93 cents per lb and closing below the 200-day moving average.
"On top of that, sugar is available and it's hard to place at destination," one US broker said, referring to the difficulty that some are having to sell raw sugar. "Futures prices are starting to converge with the cash market." March raw sugar settled down 0.33 cent, or 2.4 percent, at 13.25 cents per lb, after falling 3.2 percent to the lowest since October 1 at 13.14 cents per lb. Total volume exceeded 260,000 lots, nearly triple the average, preliminary Thomson Reuters data showed, with traders noting heavy spreading.
Nick Penney, a senior trader with Sucden Financial Sugar, said the next key support level of benchmark futures was 13.08 cents a lb. Traders added that the March/May spread attracted much of the session's volume as it violently fell to 0.04-cent under, its first discount in four months. Spread activity often reflects the cash market. Though traders noted continued long liquidation, after data last week showed speculators increased their bullish stance by more than expected, exchange data showed that open interest jumped by nearly 5,000 lots on Wednesday to a 7-1/2-month high.
The rise in open interest likely indicates that new shorts entered the market. March white sugar futures settled down $7.50, or 1.8 percent, at $407.20 per tonne. March New York cocoa settled up $27, or 1 percent, at $2,791 per tonne, after dropping to $2,731, the lowest since April and trading in a wide $92 range. New York cocoa, which is traded in US dollars, was supported by the firm British pound versus the greenback. March London cocoa settled up 7 pounds, or 0.4 percent, at 2,012 pounds per tonne, after falling to 1,972 pounds the lowest since May. March robusta settled down $14, or 1 percent, at $1,402 per tonne. March arabica coffee settled up 0.95 cent, or 0.8 percent, at $1.1915 per lb.