Liffe March white sugar climbs $25.30 to close at $844.50 per tonne on Wednesday after setting a new record of $857 a tonne. A massive cyclone in Australia sends raw sugar futures surging, attracting investor and fund buying. Liffe May robusta coffee ends down $6 at $2,252 a tonne, reversing lower after touching $2,276 a tonne, the highest for the second month contract since August 2008.
Robusta tracks an overall commodity rally from positive economic data and a weak dollar, rising above Tuesday's multi-year peaks. Liffe May cocoa closes 26 pounds higher at 2,173 pounds a tonne, below its six-month peak of 2,269 pounds a tonne, also boosted by a rise in the commodity complex. Market focus remains on developments in top grower Ivory Coast.
Category five Cyclone Yasi slammed into north-east Australia on Wednesday, threatening to flatten cane in the country's top sugar-growing region, damage farming infrastructure, and hit the top two sugar ports, with potential losses of A$500 million, a sugar industry group said on Wednesday.
Sterling Smith, senior analyst at brokerage Country Hedging Inc in St. Paul, Minnesota, said the cyclone in Australia was exacerbating a sugar market already driven higher by uncertainty about sugar exports from India and how much sweetener Brazil will divert into ethanol production.
"That means (with all these factors) supplies will be extremely tight," Smith said. "We're creating a perfect storm of bullishness." Sergey Gudoshnikov, senior economist with the International Sugar Organisation (ISO), said Australia's cyclone was supporting the surge in sugar futures, but it was unlikely to hurt the actual sugar crop. "The major damage brought by cyclones is to infrastructure - terminals, factories, bridges, roads - rather than to the cane itself," he said.
Coffee prices were firm with arabica coffee climbing to a fresh 13-1/2 year high while robusta touched its highest in 2-1/4 years. "The trouble is there's a shortage of better quality beans and funds are long," a London-based broker said, referring to the arabica market. Colombia, the world's top producer of high quality beans, has had two consecutive lower-than-normal crops, boosting coffee prices in recent months.
Cocoa futures firmed as dealers continued to weigh the impact Ivory Coast's month-long cocoa export ban could have on global supplies. Cocoa prices have rallied in response to the export ban called by Ivory Coast presidential claimant Alassane Ouattara on January 23, aimed to starve tax revenues from his rival for the presidency, Laurent Gbagbo.
"Nobody's going to rush away from cocoa right now in case it all goes badly wrong," said Gary Mead, analyst with VM Group in London. "But nobody's going to put more money on the table, because the fundamentals are all right. It's all about political risk."