Raw sugar futures on ICE extended a post-Christmas rebound on Thursday, climbing to the highest level in more than two weeks with sentiment boosted by talk that India's crop may be smaller than expected. March raws were up 0.63 cents, or 3.3 percent, at 19.62 cents a lb at 1509 GMT after peaking at 19.69 cents, the highest for the front month since December 12.
Prices have risen by about 10 percent from a low of 17.84 cents two weeks ago. "It did feel like the selling was abating (in mid-Dec) and the resulting rally combined with a strong feeling that India's crop is not performing as well as expected has led to a change in sentiment," one London dealer said. Traders said there was talk the 2016-17 sugar crop in India may be even smaller than previously anticipated following back-to-back droughts in the key producing state of Maharashtra.
Lower-than-expected output in India, the world's second largest producer, should further tighten supplies, a trend also reinforced by this week's purchase of white sugar by Egypt. Production in top grower Brazil continues to wind down. Brazil's main center-south cane belt produced 362,000 tonnes of sugar in the first half of December compared with 1.13 million tonnes in the previous two-week period, as most mills approach the end of the 2016-17 crushing season.
Traders said the market may suffer a short-term setback but if prices can hold above 19 cents there was likely to be scope for them to climb further. "It has done a lot of work very quickly from the lows so maybe a bit of consolidation is required," one dealer said. March white sugar was up $14.30, or 2.8 percent, at $523.50 per tonne. Cocoa futures were lower as the prospect of a global surplus in the 2016-17 season kept the market on the defensive.
March New York cocoa was down $44, or 2.0 percent, at $2,161 a tonne after dipping to a low of $2,154, the weakest for the front month since July 2013. March London cocoa fell 38 pounds, or 2.1 percent, to 1,767 pounds a tonne. Robusta coffee futures were higher, underpinned by concerns that heavy rains over the past few weeks in Vietnam were likely to have hurt the crop in the world's top robusta producer.
Rain has stopped this week, but cloudy weather and humidity impeded the drying process, traders said. March robusta coffee was up $26, or 1.25 percent, at $2,102 a tonne, while March arabica coffee rose 0.85 cent, or 0.6 percent, to $1.3435 per lb.
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