Sugar futures on ICE rose on Tuesday, bucking three straight sessions of losses, on a technical bounce and the prospect of global shortages boosting sentiment as many market participants gathered in London for a biennial trade dinner on Thursday. Coffee prices nudged lower while cocoa extended gains. March raws settled up 0.59 cent, or 2.6 percent, at 23.26 cents per lb. The rebound came after finding support at the prior session's low following a 6.6 percent drop from last week's highest level in more than four years.
"It's Sugar Week ... there's talk of structural deficit in the market," said Carlos Mera, commodities analyst with Rabobank. "And there's probably more consensus on a shorter season in Brazil this year." A series of meetings in London this week, in the lead up to Thursday's dinner, have included discussions about global deficit forecasts in both the 2015/16 and 2016/17 seasons.
Nick Penney, a senior trader at Sucden Financial, said in a note that the forward structure (March/May over 80 points and May/July at 90 points again) supported the expectation of tight supplies in 2017. December whites settled up $7.20, or 1.2 percent, at $595.50 per tonne. Coffee prices, however, were choppy. The robusta market remained under pressure from hedge selling ahead of Vietnam's harvest and as forecasts for rain in Brazil's arabica belt boded well for the crop in the world's biggest grower, traders said.
November robusta coffee settled down $19, or 1 percent, at $1,958 per tonne, while December arabica settled down 0.1 cent, or 0.07 percent, at $1.4745 per lb. Harvesting of robusta, of which Vietnam is the world's largest producer, will begin in the main growing province of Daklak around late October, but could be disrupted by the rainy season which ends in early November, a state forecaster said.
Cocoa prices turned higher, with the London market supported by a weak pound as exporters and bankers said banks in top producer Ivory Coast are reluctant to boost credit lines to local cocoa exporters, raising the prospect of contract defaults. March London cocoa settled up 17 pounds, or 0.8 percent, at 2,211 pounds per tonne. New York December cocoa settled up $22, or 0.8 percent, at $2,815 per tonne. The price rise comes after heavy rain last week in most of Ivory Coast's main cocoa growing regions, which boosted crop development but caused some farmers to fear flooding and disease as they begin to harvest.
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