Raw sugar futures surged late on Friday to a three-month high just shy of 24 cents per lb, as investors worried about weather hurting the harvest in Brazil and the crop in India, while cocoa was mixed after varied global grindings data clouded the demand outlook. Coffee futures edged lower on pressure from the rallying US dollar.
Raw sugar hit a three-month high as rains in Brazil further delayed harvest and ship loadings in the world's largest sugar producer. Meanwhile, India's weak monsoon hurt the crop in the world's No. 2 grower.
Dealers said heavy investor buying and short-covering of the benchmark contract as well as the October/March spread, boosted the market late. Total volume surged to a five-week high above 178,000 lots, exchange and preliminary Thomson Reuters data showed. Benchmark October sugar futures on ICE surged 0.67 cent, or 2.9 percent, to finish at 23.92 cents a lb, the highest settlement for the spot contract since April 12. In the last half hour of trade, October rallied to a session high at 23.99 cents, just shy of the psychological 24-cent level.
On the spot contract basis, it soared through the 200-day moving average at 23.41 cents. "The sugar market is trading on two things - India and Brazil - both of them are supporting these prices in the sense that the weather news is not getting any better," said Keith Flury, analyst at Rabobank. Abundant rainfall over Brazil's main centre-south sugar cane crop during this dry season risks stranding some of the 2012/13 crop until the next season, consultancy Datagro said on Thursday.
Meanwhile, India's monsoon rains have revived and are expected to remain active at least until the end of this month, weather officials said on Friday, easing risks of a drought for now and helping planting to pick up momentum. Cocoa futures were little changed after Asia's grindings rose and North America's grind fell sharply in its biggest drop in more than three years. ICE September cocoa futures inched down $1 to settle at $2,229 a tonne, while London September cocoa closed up 11 pounds, or 0.7 percent, at 1,543 pounds per tonne.
"The market is demonstrating that the grinds were not much of a surprise," said a European trader. Cocoa grindings in Asia rose 5.7 percent to 150,726 tonnes in the second quarter of 2012 from the same period last year, while North American cocoa grindings in the second quarter of 2012.
The data follows Europe's sharpest quarterly fall in grindings for at least 12 years, dropping 17.8 percent from the same period last year. Arabica futures on ICE were slightly lower, digesting Thursday's gains after closing above key technical levels, with September fell 2.00 cents, or 1.1 percent, to close at $1.8695 per lb. Price differentials for Brazilian beans eased in Europe's cash coffee market on sluggish demand as roasters were reluctant to step in because of high prices, traders said. Robusta coffee futures on Liffe ended down with September falling by $5 to $2,187 a tonne.