Liffe December white sugar ended $24.30 higher at $805.00 per tonne on Tuesday after earlier rising to a record high for the front month of $812.90. Fund buying against the backdrop of a tightening supply outlook helping to fuel the run-up in prices. Liffe January robusta coffee ended $14 higher at $2,060 per tonne after hitting a two-year peak of $2,098.
Market supported by the sharp advance in ICE arabicas and concern about rains in top producer Vietnam. Liffe second-month March cocoa finished 42 pounds higher at 1,899 pounds a tonne. Market boosted by gains in many other commodity market and has risen more than 100 pounds after dipping to 1,798 pounds on Monday, the lowest level for the second month since August 2009. "I think people (funds) are reallocating some money to commodities. Everybody wants sugar, coffee, base metals, gold and silver as well," said Romain Lathiere, fund manager with Diapason Commodities Management.
"On many commodities we are reaching really high levels." The sugar market has surged in the last few months, with prices more than doubling since May, as expectations for a rise in output failed to materialise due to adverse weather, sparking renewed concern about low global stocks.
"It's general euphoria - it's follow-my-leader," a senior London sugar futures broker said referring to increased buying momentum in soft commodities. Some dealers say the raw sugar market has the potential to rise to 35 to 40 cents a lb in the medium term but others suggested it risks a setback due partly to a lack of physical offtake at current high prices.
"For me it is a bit risky to take a long position right now on sugar even though everyone knows there will be another year of (global) deficit in sugar production," Lathiere said. Prices have been supported by tight supplies of high quality washed arabicas following several years of below-par crops in key producer Colombia. Production in Colombia is expected to rise slightly this year, possibly to around 9 million 60-kg bags, but looks set to remain far below the crops of about 12.5 million bags harvested in 2006 and 2007.