Sugar and cocoa futures on ICE Futures US edged higher on Wednesday on a weaker US dollar, as arabica coffee futures declined on bearish technical signals. The dollar again retreated against a basket of currencies, supporting prices of greenback-based commodities as it makes them less expensive to holders of other currencies. The dollar is headed for its biggest quarterly loss in five years as investors wind back expectations for US interest rate rises.
US Federal Reserve Chair Janet Yellen's comments on Tuesday that the central bank would be cautious on raising interest rates kept the dollar under pressure.
"The weaker dollar is providing some support to the softs," said Tracey Allen, senior commodities analyst with Rabobank.
The sugar market was also focused on the start of cane harvesting in center-south Brazil, she added. Production in the center-south is expected to be higher year-on-year, but will be offset with lower-than-expected production in key Asian countries.
ICE May raw sugar edged up 0.01 cent, or 0.1 percent, to finish at 15.87 cents per lb.
ICE May white sugar settled up $1.20, or 0.3 percent, at $454.40 per tonne.
Investors have piled into sugar on expectations of a supply deficit emerging this year, lifting the front-month to a 17-month high of 16.75 cents a lb last week.
In coffee, the ICE May arabica contract settled down 0.45 cent, or 0.4 percent, at $1.27 per lb, under pressure from a weakened technical outlook, traders said.
The $1.31 to $1.315-level has become an area of strong resistance difficult to overcome over the next few days without support from a macroeconomic rally, one trader said.
ICE May robusta coffee closed up $8, or 0.5 percent, at $1,504 per tonne.
ICE May New York cocoa rose $4, or 0.1 percent, to finish at $2,974 per tonne, again moving sideways.
ICE July London cocoa settled down 12 pounds, or 0.55 percent, at 2,173 pounds per tonne, again pressured by a stronger pound against the dollar which tends to create an arbitrage opportunity to buy cocoa in New York and sell futures in London.
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