London white sugar futures rallied to a three-month peak on fund buying on Friday against the backdrop of tightening supplies with demand holding up well despite the economic downturn and production falling. Coffee futures also rose, boosted partly by a weaker dollar, while cocoa climbed on continued concern about supply tightness triggered by reduced output in top producer Ivory Coast.
In London benchmark March white sugar futures hit a session peak of $387.00 per tonne, the highest on a front-month continuation basis since November 7. March finished $8.30 higher at $386.50 per tonne.
"The technicals are starting to align with the fundamental story. It looks compelling for them (funds)," Rabobank soft commodity trader Nick Hungate said. "Demand has been maintained despite all the negative commentary (on the global economy). Now people are more focussed on supply (tightness) despite the fact that the Brazilian crop has gone on so long and been bigger than people had anticipated some months ago," he added.
Analyst F.O. Licht on Friday cut its estimate for world sugar production in 2008/09 to 156.3 million tonnes, raw value, down from a previous estimate of 160.9 million and the prior year's 169.3 million. The downward revision mainly reflected reduced production prospects in India which more than offset a slight increase in Licht's forecast for Brazilian output.
"Because of lower Asian and European production the market will move from surplus to deficit in 2008/09 as output will not match demand for the first time in three years," Licht said. ICE March raw sugar was up 0.13 cent to 13.11 cents per lb at 1740 GMT. Shree Renuka Sugars Ltd, India's biggest refiner, may import up to 500,000 tonnes of raws by the end of the season in September after rules were relaxed, its managing director said on Friday.
ICE May cocoa settled $63 higher at $2,833 per tonne, while London May finished 28 pounds higher at 1,971 pounds per tonne. Cocoa bean exports from Ivory Coast's San Pedro port totalled 225,644 tonnes from October to January of the 2008/09 season, down more than 17 percent on the same period last year, port data showed on Friday. ICE March arabicas edged up 0.25 cent to $1.1945 per lb by 1740 GMT while London May robustas ended $18 higher at $1,680 per tonne.