NEW YORK/LONDON: Raw sugar futures on ICE rose 2% on Tuesday to a seven-month top as weather worries in several producing regions reduce expectations for a supply surplus in 2020-21. Rising oil prices were also supportive.
Arabica coffee futures were slightly higher, edging further away from a more than two-month low set last week, while cocoa prices eased.
March raw sugar settled up 0.27 cents, or 2.0%, at 13.88 cents per lb, the highest level for futures since March 2.
The front-month contract broke resistance at 13.77 cents, with dealers citing concerns about dry weather in top exporter Brazil where soil moisture remains way below average.
The dry weather in Brazil could reduce sugar production in the final stage of the current crop, and also impact yields in the 2021 season.
The situation in Brazil, on top of problems in Thailand, Russia and the European Union, is seen cutting the expected global surplus in 2020-21.
But the large long position held by funds could lead to downward corrections, dealers said.
December white sugar settled up $5.70, or 1.5%, at $378.90 a tonne.
December arabica coffee settled up 0.45 cents, or 0.4%, at $1.0765 per lb. The front month set a more than two-month low of $1.0490 on Friday.
Dealers noted exchange stocks were continuing to decline, though a drawdown in coffee from the usual origins, such as Honduras, had been partially offset by the grading of some supplies from Brazil for potential delivery to the exchange.
“So far the pass rate for Brazil has been very low at around 40%. This will probably give some trade houses pause going forward,” Cardiff Coffee Trading said in a report.
November robusta coffee settled down $13, or 1.0%, at $1,255 a tonne.
December London cocoa settled down 27 pounds, or 1.6%, to 1,698 pounds per tonne, pressured partly by an improving outlook for the main crop in top producer Ivory Coast.
Mainly above-average rains interspersed with sun last week in most of Ivory Coast’s cocoa regions should improve the chances of a larger, higher-quality October-to-March main crop, farmers said on Monday.
December New York cocoa settled down $22, or 0.9%, to $2,437 a tonne.
—Reuters