Fund selling capped sugar futures on Thursday but dealers said a bounce was possible, while robustas and cocoa were slightly up in light volumes. Dealers said sugar futures appeared oversold, having fallen sharply since mid-July, and were poised for a recovery once the present bout of fund liquidation fades.
"The last of the spec selling is working its way through," said Toby Cohen, a director of London-based sugar trade house Czarnikow. David Sadler, a senior sugar futures trader with another trade house, said, "Once the ball starts to roll, it gathers a bit more weight and the funds have been liquidating in raws."
Traders talked of physical demand picking up in light of the recent drop in futures prices, and noted talk of Tunisian buying of white sugar this week. There was no immediate confirmation. Traders also talked of selling against Thursday's EU sugar export tender. The European Union sold 42,500 tonnes of white sugar at a maximum rebate of 30.558 euros ($47.87) per 100 kg at Thursday's tender, EU data showed.
London October white sugar futures were down $1.40 to $351.60 a tonne in low volume of 691 lots at 1535 GMT, while raw sugar futures were up 0.06 cent at 12.15 cents a lb. Robusta coffee futures were slightly up but well below the day's highs.
September robustas were up $1 at $2,312 a tonne at 1537 GMT after an early run-up to $2,359. The contract had fallen $63 on Wednesday, weakened by a broad-based decline in commodity markets. Volume was boosted by a large against actualise trade on January 2009 which accounted for 2,361 lots of 2,420 lots traded on that contract.
Dealers said the robusta market was underpinned by concern about supply tightness ahead of the next Vietnamese harvest, which is expected to start around mid-October. Vietnam's coffee exports would rise 22.8 percent this month from last July to 1.17 million bags, the statistics office estimated, even though the country's coffee stocks are dwindling before a new harvest.
Arabica futures on ICE remained on the defensive with September off 1.20 cents at $1.3475 cents per lb. The contract touched $1.3465, its lowest level since June 11. Dealers said the arabica premium had fallen significantly in the last few days, with supplies much more plentiful than those of robusta coffee, but had now reached levels where there could be a pick-up in arbitrage buying of the ICE contract.
London cocoa futures rose gently on light industry buying, aided by a weak pound. London December cocoa futures were up 10 pounds to 1,462 pounds in light turnover of 1,905 lots at 1538 GMT. ICE September cocoa futures were up $2 to $2,756 a tonne.