Raw sugar futures on ICE jumped to a 1-1/2-year high on Wednesday as poor crop prospects in India, the world's second-biggest producer, were only partially offset by the strong start to the harvest in top grower Brazil. Cocoa futures fell from technically overbought levels, with the market's strong run-up appearing to have at least temporarily run out of steam and the New York market pressured by the weak British pound. Coffee futures were slightly higher.
India is likely to become a net importer of sugar in 2016/17 after the first back-to-back drought in nearly three decades hit cane plantations in Maharashtra, the biggest-producing state. "India is the single most bullish part of the sugar balance sheet at the moment," said a senior analyst with a trade house. "Everything out of Brazil is bearish," the analyst added, referring to a strong start to the cane harvest in center-south Brazil.
ICE July raw sugar settled up 0.4 cent, or 2.5 percent, at 16.65 cents per lb, after rising to 16.79 cents per lb, the highest for the spot contract since October 2014. Chart-based buying was triggered above 16.63 cents late in the session, the high reached in March. August white sugar settled up $8.90, or 1.9 percent, at $476.80 per tonne. Cocoa futures were lower, with the markets suffering a setback after the recent strong run to 2016 highs.
Dealers said that funds have been building up long positions during the run-up and may be taking some profits. The market remained underpinned, however, by the slow pace of port arrivals in top grower Ivory Coast and concern about bean quality. London July cocoa settled up 2 pounds, or 0.1 percent, at 2,307 pounds per tonne. July New York cocoa settled down $19, or 0.6 percent, at $3,186 per tonne.
Robusta coffee consolidated just below last month's five-month high, underpinned by concerns that drought is likely to curb production in Vietnam. "If there were sufficient rainfall in the near future, the situation could improve, but this is far from certain," Commerzbank said in market note. "In any case, the forecast for the next few days in the key Dak Lak growing region, which accounts for around a third of the crop, is still predicting too little rain." July robusta coffee settled up $6, or 0.4 percent, at $1,585 per tonne. July arabica coffee settled up 0.45 cent, or 0.4 percent, at $1.197 per lb.
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