ICE raw sugar futures dropped to a six-month low on Thursday as global oversupply and heavy stocks offset a slowdown in the pace of harvesting in top producer Brazil. Cocoa prices on ICE touched a fresh three-year high, supported by strong technical outlook and demand, and arabica coffee fell in choppy trade.
Benchmark October raw sugar on ICE Futures US closed down 0.11 cent, or 0.7 percent, at 15.91 cents after dipping to 15.84 cents, the front-month's lowest since February 18. "Supplies are good, and physical demand is very slack," said Sterling Smith, a futures specialist with Citigroup in Chicago.
Cosan SA, Brazil's largest sugar and ethanol producer, said it was foregoing sales of sugar for better conditions later in the 2014/15 year, when supplies are expected to tighten after an early end to the harvest. In the face of hefty nearby supplies, traders shrugged off this week's data from Brazil's cane industry group Unica that showed rains hampered harvesting this month. October refined white sugar on Liffe finished down $2, or 0.5 percent, at $430.60 per tonne.
Benchmark ICE December cocoa futures rose $4, or 0.1 percent, to settle at $3,235 per tonne after rising to $3,248, the highest since July 2011. "This has been another a measured advanced. Cash prices have been very supportive," Citigroup's Smith said. Trading was choppy as dealers liquidated positions.
Some traders said the market was looking overbought, particularly given that many have revised their view of the 2013/14 global balance sheet to forecast a small surplus, rather than the deficit previously seen. Liffe December cocoa futures closed up 6 pounds, or 0.3 percent, at 2,030 pounds per tonne, near a session and contract high of 2,031 pounds.
The premium on the September contract remained volatile, shooting as high as 44 pounds per tonne over December during the day's trade. ICE December arabica coffee dipped 1.15 cents, or 0.6 percent, to finish at $1.8845 per lb on technical weakness as traders assessed the latest information from Brazil's drought-damaged crop.
Brazil's carryover coffee stocks are running out and the world's top coffee producer is unlikely to assemble extra supplies in coming years after the worst drought in recent memory, according to the president of the Minas Gerais state trade center. "The focus is on what really was the outcome of this season and how the weather will evolve," a European trader said. November robusta futures on Liffe closed down $20, or 1 percent, at $1,956 a tonne.