Raw sugar rises on short-covering

Raw sugar futures rose on Wednesday on short-covering as a drop in prices below ethanol parity levels in Brazil warded off sellers. Arabica coffee and New York cocoa also rose. March raw sugar settled up 0.33 cent, or 2.3 percent, at 14.7 cents per lb. Dealers pointed to light short-covering on Wednesday as the drop in prices below ethanol parity levels in Brazil prompted sellers to back off.
Buyers entered the market on Wednesday and boosted prices after prices hit Tuesday's low, said Boyd Cruel, senior market strategist at High Ridge Futures in Gilbert, Arizona. "It pushed down near the lower end of the range and held it yesterday and basically got a technical bounce," Cruel added.
The dollar, which softened ahead of a US Federal Reserve meeting, also offered earlier support. "The markets are running short and funds would rather be buyers," a US trader said. December white sugar settled up $6, or 1.6 percent, at $371 per tonne, also recovering from a sharp slump on Tuesday.
White sugar futures have recently been under pressure as the European Union inches closer to liberalizing its sugar quotas on October 1 and boosting production sharply. "The market is going to have to learn how to deal with the return of EU sugar," said Tobin Gorey of the Commonwealth Bank of Australia. "And we suspect it will be the hard way."
December arabica coffee settled up 1.2 cents, or 0.9 percent, at $1.3655 per lb, after touching a low of $1.3745. Prices extended gains on worries that the crop in top-grower Brazil won't be as plentiful as earlier expected, because of recent dry weather, the US trader said. "There's definitely going to be some loss, but we don't know to what extent. That's the billion-dollar question," the US trader added.
November robusta coffee settled up $52, or 2.6 percent, at $2,035 per tonne, a two-week high. December London cocoa settled up 12 pounds, or 0.8 percent, at 1,480 pounds per tonne. December New York cocoa settled up $33, or 1.7 percent, at $1,998 per tonne. Technical buying and short-covering boosted prices on Wednesday, said Frank Cholly, senior commodities broker at RJO Futures in Chicago. "There's a lot of volatility ... the market has been trading in a range of between 1,900 and 2,000," Cholly said.