Raw sugar futures soared above the 30-cent mark on Friday, on a combination of chart-based buying, a small crop in top grower Brazil and the weak US dollar. Arabica coffee and US cocoa futures also climbed, but only modestly, while London's cocoa and robusta coffee inched lower.
The commodity complex rebounded after the dollar plunged to a record low against the Japanese yen on speculation authorities will not halt the yen's surge, and while fresh austerity moves by Spain helped dampen fears about Europe's debt crisis. "I think the only trade people are really interested in for the softs today is sugar," said Hector Galvan, senior market strategist for brokerage RJO Futures in Chicago. ICE October raw sugar futures jumped 1.07 cents, or 3.7 percent, to 30.19 cents a lb by 12:28 pm EDT (1628 GMT), after climbing as high as 30.21 cents.
"You have an improved technical picture along with a weaker dollar boosting sugar," said Country Hedging Inc analyst Sterling Smith, adding sweetener values are buoyant despite the shaky performance of equity markets. The market has climbed more than 14 percent in just under two weeks.
The Brazilian cane crop hounded by poor yields from ageing plants will likely get smaller in the months ahead, cash brokers believe Chinese buying will pick up as Beijing seeks to restock, and there are persistent questions India will be able to export as much sugar as it had earlier announced.
Brokers reported talk that China, which is expected to become the world's No. 1 raw sugar importer in 2011/12, could authorise extra import quotas to relieve soaring domestic prices and low reserves. October white sugar futures on Liffe rose $21.30, or 2.8 percent, to $787.10 per tonne. ICE December arabica futures fell 0.35 cent to $2.6805 per lb, while November robusta coffee on Liffe was down $5 at $2,300 per tonne. December cocoa on ICE closed up $19 at $3,004 per tonne, while Liffe December cocoa finished up 1 pound at 1,889 pounds per tonne.