Raw sugar futures on ICE turned slightly higher on late-day buying on Wednesday but remained in oversold territory after extending the prior session's losses to a 10-month low and bouncing above chart-based support. Cocoa prices also firmed on chart-based buying, while coffee slipped in tandem with broader commodity markets. May raw sugar futures settled up 0.01 cent, or 0.06 percent, at 17.3 cents per lb after falling to 17.02 cents, the weakest for the front month since May 2016.
Prices were weak for most of the session after total open interest rose by more than 6,700 contracts to 788,422 in the prior session, ICE data showed, when prices tumbled. Dealers said prices were pressured by short-selling by funds, although there was little liquidation by those with bullish positions.
"The fund community must now have a significant portion of fresh shorts and we would guess the fund net long is now somewhere around 65/70k lots," Sucden Financial's Tom Kujawa said in a note. Further downside potential was seen limited, with dealers noting the 17-cent level as psychological support and the 14-day relative strength index showing an oversold market.
May white sugar settled up $2.40, or 0.5 percent, at $488.30 per tonne, after dipping to $481.70, the spot contract's weakest since June 2016. May New York settled up $11, or 0.5 percent, at $2,165 per tonne, facing resistance at the 100-day moving average just above the market. May London cocoa settled up 14 pounds, or 0.8 percent, at 1,744 pounds per tonne.
Both markets have rallied above their 50-day moving averages this week as speculators rushed to cover large net short positions after prices rebounded from multi-year lows. However, the market remains vulnerable to a glut amid a potentially record global cocoa surplus in the current season and another possible surplus in 2017/2018. May arabica settled down 3.05 cent, or 2.1 percent, at $1.417 per lb.
Dealers said weakness in larger commodity markets weighed on prices as the 19-market Thomson Reuters CoreCommodity Index extended losses. May robusta settled down $7, or 0.3 percent, at $2,164 per tonne, with dealers noting physical selling in Vietnam. "The internal price in Vietnam has been very high and the crop is quite low," one said. "So there's been quite a lot of front-loading of selling. But that selling has gone on longer than we anticipated."
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