Sugar prices fall to 2-1/2 year low, cocoa climbs

Sugar futures on ICE extended losses to 2-1/2-year lows on Wednesday, pressured by producer hedging and ample global supplies, while cocoa prices rose. May raw sugar settled down 0.07 cent, or 0.6 percent, at 12.06 cents per lb, after hitting 11.93 cents, its lowest since late September 2015. August white sugar settled down 80 cents, or 0.2 percent, at $335.20 per tonne, after reaching its weakest since August 2015 at $332.30.
Prices were partly pressured by hedging from Thai and Brazilian producers, with the latter rushing to take advantage of the weakening in the real currency, while short-covering and position rolling into July briefly turned prices positive, traders said. "There is a game of leapfrog taking place between Brazilian and Thai producers as they compete to fix export prices," Nick Penney, senior trader at Sucden Financial, said in a market note.
Ample global supplies and the possibility of Indian exports also remained in focus, as the country mulls a subsidy that could make exports viable. May white sugar, which expires on Friday, closed up 0.2 percent at $346.20 per tonne, lifting its premium over August to a session high of $13.30 from $10.30 the prior session. "The spread suggests a shortage of deliverable sugar," said one dealer, noting current prices were unattractive to EU and Thai producers.
July London cocoa settled up 33 pounds, or 1.9 percent, at 1,773 pounds per tonne. July New York cocoa settled up $49, or 1.9 percent, at $2,580 per tonne, in heavy volume due to position rolling out of May, traders said. Both markets remained within their recent trading ranges, with dealers pointing to speculative buying after the market held session lows from the past three weeks.
There were signs of recovering demand as Swiss chocolate maker Barry Callebaut reported sales rose 8 percent in the six months to February, compared to global growth of 2.5 percent. This came after UBS downgraded Hershey Co stock to "sell" from "neutral" on Tuesday, due to slowing category consumption, intensifying competition and rising cocoa prices.
July arabica coffee settled up 0.7 cent, or 0.6 percent, at $1.2025 per lb. Brazilian green coffee exports fell in March to the lowest level in six years for that month, exporters' association Cecaf? reported late Tuesday. May robusta coffee settled down $7, or 0.4 percent, at $1,702 per tonne.