Raw sugar futures slumped more than 5 percent on Thursday as much-needed rain in India boosted hopes for growing conditions in the world's No. 2 producer, encouraging a sell-off and pushing prices below a key level. ICE cocoa surged 4 percent with a boost from a weaker dollar and early strength in the commodity complex, with limited volumes of origin selling and also technical buying, dealers said.
Robusta coffee jumped to the highest in nearly two months, with dealers expecting roasters to rebuild robusta stocks, while arabica turned quietly lower. Sugar futures tumbled on some much-needed rain in India, hitting a key level on the chart that triggered a flurry of sell stops. Higher-than-expected cane crushing figures on Wednesday from Brazil's industry association also pressured prices, dealers said.
Benchmark October sugar futures on ICE sank 1.07 cent, or 4.5 percent, to end at 22.50 cents a lb, having tumbled 5.6 percent to 22.25 cents earlier in the session. The contract tumbled through the 200-day moving average at 22.74 cents per lb, helping to trigger a flurry of sell-stops, dealers said. "The market reacted to the rain that we see falling in India, which picked up again, and the progress report from Unica, which didn't seem to impact the market yesterday but maybe Asia or Europe reacted more to it today," said Michael McDougall, a senior vice president for Newedge USA.
India's weather office chief said its crucial monsoon rains will improve in coming days, but the country's government raised the possibility of a drought, with ministers scheduled to meet next week to discuss the lack of monsoon rains. White sugar futures on Liffe also fell and October closed down $22.50, or 3.5 percent, at $615.50 a tonne. The global sugar surplus remains on target to fall in the 2012/13 season, though declines will be less than previously suggested, while adverse weather in several producers may stop prices dropping far below recent levels, a Reuters poll showed on Thursday. The rise in cocoa futures on ICE tripped technical buying above the $2,278-$2,285 level, basis ICE September cocoa futures, last week's high, they said.
ICE September cocoa futures jumped $86, or 3.9 percent, to settle at $2,316 a tonne, the highest settlement since July 9. The session high reached $2,330, stopping just short of the 200-day moving average at $2,334. London December cocoa ended up 25 pounds, or 1.6 percent, at 1,567 pounds per tonne.
Robusta coffee futures jumped to the highest level in nearly two months as roasters needed to rebuild their stocks, dealers said. Robusta coffee futures on Liffe were also higher with September finishing up $60, or 2.8 percent, at $2,209 a tonne. Arabica futures turned lower in consolidative dealings after Tuesday's steep fall and as the key contract failed to veer far from the 100-day moving average. September arabicas on ICE closed down 2.25 cent, or 1.3 percent, at $1.7405 a lb.