May cocoa on Liffe ended 15 pounds lower at 2,326 pounds on Monday, weighed by the strength of sterling. Market not far off 32-year peak of 2,356 pounds set on Thursday. March white sugar ended $6.20 higher at $753.20 a tonne. Market awaits confirmation that physical buyers are willing to pay current high prices before possibly mounting another challenge to record peak of $767.00 set last week.
March robusta coffee settled $4 higher at $1,364 per tonne, remaining in its current trading band after finding support towards the lower end of the range. Earlier, raw sugar futures on ICE rose on fund and investor buying on Monday as the market advanced towards last week's 29-year high, but some dealers saw strong immediate resistance at the psychological 30 cents a lb. Dealers said the market was keenly waiting to see if major physical buyers such as Pakistan, Iran and Indonesia would be prepared to pay current high prices before mounting another challenge to last week's peak.
"Sugar is having trouble getting to 30 (cents)...but if it makes 30 no doubt we will see a whole slew of automatic trading come in and massive buying," said VM Group analyst Gary Mead. "I don't know if there is much more bad (bullish) fundamental news to come out. I think that is the difficulty for the really rampant bulls who think it is going to soar."
Sebag said he believed the market would at some point break above 30 cents, but the prospect of new crop supplies from Brazil and a vigorous plantings response of farmers around the world to high prices, would cap the upside potential. Referring to the high whites-over-raws premium, Sebag said, "It is likely that the white premium will continue to be strong - refiners will not sell below cost of production."
ICE March raw sugar futures rose 0.70 cent or 2.4 percent to 29.48 cents a lb at 1526 GMT. The contract climbed to a 29-year peak of 29.82 cents last week, falling just shy of the widely targeted 30 cent level. Cocoa futures moved sideways as the market consolidated after last week's fourth-quarter 2009 North American grind figures, a measure of demand, were down 1.5 percent year-on-year.
"Nobody really thought they (fourth-quarter grinds) were going to be radically improved," Mead said, noting the figures were in line with expectations. The cocoa market remained underpinned by signs that demand was slowly recovering after a recession-linked decline in the first half of 2009. Malaysia's cocoa grindings rose 1.3 percent in the fourth quarter of 2009 to 74,993 tonnes after three straight quarters of decline, the Malaysian Cocoa Board said on Monday.