Raw sugar and arabica coffee futures on ICE rose in heavy volume on Wednesday, as investors continued to roll out of May contracts into July, with both markets holding just above the lowest levels in nearly three years. Cocoa futures on both ICE Futures US and Liffe dipped, weighed down by ample West African mid-crops (April-September) and expectations of producer selling.
May raw sugar futures gained 0.18 cent, or 1 percent, to settle at 17.90 cents a lb. The front month contract was within sight of a more than 2-1/2-year low of 17.47 cents touched on April 3. May/July spreading was heavy ahead of the May contract's expiry at the end of April as investors rolled out of the spot contract to avoid taking physical delivery, dealers said.
Total volume reached roughly 150,000 lots, the largest since March 8, preliminary Thomson Reuters data showed. Total open interest in sugar futures jumped to the highest level in more than three years in the previous session, ICE data showed. "It looks as though we could make a push higher to 18 cents and beyond," Nick Penney of brokerage Sucden Financial said, adding: "producer selling ideas have come down from recently". Options-related dealings were also seen keeping the May futures contract around the 18-cent level ahead of May options expiry on Monday, dealers said.
A Paris-based sugar futures broker said rainfall in top grower Brazil was underpinning the market. Keith Flury, a senior soft commodities analyst with Rabobank, said Brazilian millers were expected to focus on making ethanol biofuel in the early stages of the cane crush in the centre-south, tightening near-term sugar availability.
May white sugar on Liffe finished up $3.50, or 0.7 percent, at $509.90 a tonne. ICE May arabica coffee futures firmed 0.65 cent, or 0.5 percent, to end at $1.3650 per lb. The contract held above last month's low of $1.3205 per lb, the lowest level on a continuation chart since May 2010. Heavy May/July spreading continued ahead of the May contract's first notice day April 22 while short-covering also helped lift the market, US dealers said.
Total volume reached 79,531 contracts on Tuesday, the highest since June 2010, when it hit a record at 110,952 contracts, exchange data showed. On Wednesday, volume neared 47,000 lots, more than double the 250-day average, preliminary Thomson Reuters data showed. July robusta coffee futures on Liffe rose $8, or 0.4 percent, to $2,045 a tonne.
ICE cocoa futures turned lower after the key May contract initially rose to a double-top with the previous session's two-month high at $2,222 per tonne. May cocoa on ICE closed down $5, or 0.2 percent, at $2,214 a tonne, with May/July spreading continuing to boost volume ahead of the spot contract's first notice day. Liffe July cocoa futures settled down 3 pounds, or 0.2 percent, at 1,483 pounds a tonne.