Raw sugar futures on ICE rose more than 1 percent on Friday and breached the 20-cent-per-lb mark as shorts resumed their race to cover sell positions on continued concerns that heavy rains will delay harvesting in Brazil and crimp nearby supply. Sugar's recovery from August 2010 lows hit at the start of the week stalled on Thursday due to a spell of profit-taking.
But the market whipped higher again in early afternoon trading Friday and was heading for an almost 5-percent rise on the week, breaking a two-week losing streak. ICE July sugar futures were up 1.32 percent at 20.02 cents a lb at 1:39 pm EDT (1739 GMT), just below a session high of 20.04 cents.
Prices were up more than 6 percent from the 22-month low of 18.86 cents hit on Monday. Near-term worries over the flow of sugar from Brazil triggered the buying in what traders called a long overdue correction. For now, such worries offset growing oversupply and sluggish demand in the long run. "Sooner or later the crop will start to dry out, and the crushing season will get on track and accelerate," said Stefan Uhlenbrock, soft commodities analyst with Germany-based F.O. Licht.
Adding to the bearish long-term outlook, Kingsman SA on Friday lifted its global sugar surplus forecast by 63 percent to 9.3 million tonnes in the 2012/13 crop year, saying high prices earlier in the year had spurred planting. London August white sugar was up 1.07 percent at $577 per tonne on slim volume of 2,879 lots. New York July sugar will seek support at 19.46 cents per lb and rise from there towards 20.43 cents, according to Reuters market analyst Wang Tao.
Arabica second-month coffee futures remained under pressure just above Thursday's 23-month low of $1.561 per lb, standing at $1.5765 for a loss of 0.47 percent. Expectations of a big harvest in Brazil have weighed on arabica prices, while tight stocks have sustained the robusta market at near eight-month highs. "The use of robustas in a number of blends has increased due to a scarcity of South American arabica beans earlier on," Uhlenbrock said.
Robusta futures on Liffe eased, with September down $50 or 2.35 percent at $2,077 per tonne on modest volume of 4,333 lots, undercut by the stronger dollar. Cocoa futures were pressured by a stronger dollar, which weighed on ICE dollar-denominated markets, and the European banking and debt crises. Liffe September cocoa futures were up 8 pounds or 0.53 percent at 1,519 pounds a tonne, while ICE July cocoa futures settled down 1.18 percent at $2,200 per tonne.