Sugar futures were mixed on Friday in choppy trading as the market searched for direction following the highs hit last week on strong demand from top consumer India and weak global supplies. Cocoa futures rose on investor buying and short-covering, while robusta coffee edged lower, but was seen rangebound, traders said.
October Liffe white sugar closed down $3.00 at $553.00 a tonne in choppy trade on Friday, having touched a session low of $539.00 a tonne earlier. December Liffe cocoa settled 33 pounds higher at 1,882 pounds a tonne, on investor buying. November robusta coffee settled down $9 at $1,358 per tonne, and traders said it was consolidating.
Sugar's rally has been driven by tight supplies in top growers Brazil and India, resilient global demand and renewed signs of strong import requirements by India. "I think, to be honest, the market is struggling a bit for direction at the moment," Jake Wetherall, a trader at Rabobank said. Earlier sugar futures fell by more than 3 percent, and dealers said the drop was partly triggered by news the CFTC was looking to rein in speculation in energy and commodity trading.
Stops were triggered on ICE as key support levels were breached. "I think some people were looking for it to go down beyond the range it was trading in," Wetherall said. "It took a dip and then came straight back up again." Wetherall said he sees October raw sugar trading between 21.40 cents a lb and the near three-decade high of 23.33 cents a lb it hit on August 12. "I wouldn't like to guess which side it will break out on," he said.
Analysts said a fall in raw sugar futures near the end of last week from a 28-1/2-year peak was seen as an opportunity by Indian importers to possibly book orders for around 500,000 tonnes of raw sugar.
Sugar prices have proved resilient even as investors lighten holdings in a reminder of buying patterns seen in 2006 when prices scaled 25-year highs, making potential for further gains all the more compelling. Ivory Coast's upcoming cocoa crop may exceed last season in size, but not quality, as a lack of investment continues to dog the No 1 world supplier - setting the stage for softer prices next year.