March white sugar in London finished $5.50 higher at $656.20 a tonne after setting a record peak for the front month of $666.30 on Tuesday. Market supported by nearby supply tightness after heavy rains reduced production in top exporter Brazil. London March robusta coffee ended $2 higher at $1,404 a tonne. Coffee market supported by a shortage of quality arabicas, which has seen the discount for robustas widen sharply.
May cocoa in London settled 13 pounds lower at 2,274 pounds a tonne after peaking at 2,290 pounds, the highest level for the benchmark second month in more than 25 years. Weakness in ICE cocoa, partly driven by a stronger dollar, helped to drag the London market lower. "The situation is really tight on sugar. Both London and New York are skyrocketing due to that," said Romain Lathiere, Swiss-based fund manager with Diapason Commodities Management.
The market has risen about 11 percent after trading as low as $597.00 less than a week ago. Sugar was already facing another large global deficit in 2009/10 before excessive rains dimmed the outlook in top producer and exporter Brazil.
Rains that have persisted in the past few months will cut further into Brazil's sugar output for 2009/10, shaving several million more tonnes off the total, an Agriculture Ministry technician said on Monday. Merchant Czarnikow in late November forecast a 2009/10 global sugar deficit of 13.5 million tonnes, versus a deficit of 15.8 million tonnes in 2008/09.
The contract had earlier risen to 2,290 pounds, the highest level on the benchmark second month in more than 25 years and a level not exceeded on a weekly closing basis since October 1977, according to ThomsonReuters data. The market has been supported by a slowdown in port arrivals in top producer Ivory Coast after a strong start to the season.
"I think you will see that (declining arrivals) continuing now. I think they will tail off in the coming weeks," one London dealer said. "We still have bullish news on the fundamental side for both (cocoa and coffee)," Lathiere of Diapason said, also citing reduced prospects for coffee output in Colombia and quality concerns in Brazil.