The benchmark ICE raw sugar resumed its downward trend on Thursday, after the prior session's surprising sharp reversal higher, on expectations for abundant nearby supplies while the October/March spread narrowed sharply. Cocoa futures rallied for the second consecutive session after arrivals in top grower Ivory Coast were reported lower than expected, causing investors to revise down their expectations. Arabica coffee on ICE Futures US and robusta on Liffe dropped.
Raw sugar prices fell for the 11th day out of 12 sessions after Wednesday's late-day short-covering rally surprised the market. The prior session's move lifted total interest for the first time in nine sessions, by nearly 12,000 lots to 836,005 lots on September 17, exchange data showed. ICE October raw sugar futures closed down 0.09 cent, or 0.6 percent, at 13.79 cents a lb, not far from Wednesday's intraday low at 13.32 cents, the lowest since May 2010.
The most-active March contract settled down 0.3 cent, or 1.5 percent, at 15.95 cents, near the prior session's low at 15.89 cents, the lowest level since February 14, on heavy long liquidation and new selling, traders said. The discount on October versus the March contract shrunk to 2.19 cents, after narrowing to 1.86 cents earlier in the session. On Tuesday it was at 2.61 cents.
"Trade is all about the spreads, not the flat price. The weakness has been coming from all this unwanted sugar available for the (October) delivery. It seems like someone is ready to step in," said Naim Beydoun of Swiss Sugar Brokers, referring to large sugar inventories from Thailand that have been pressuring spot prices. Liffe December white sugar ended down $3.60, or 0.9 percent, at $413.60 a tonne.
In cocoa, the ICE December contract settled up $39, or 1.2 percent, at $3,192 a tonne, having risen 4 percent in two sessions, the biggest two-day rally for the spot contract since January 28. March cocoa in London closed up 20 pounds, or 1 percent, at 2,019 pounds a tonne, after tapping a contract high at 2,025 pounds. In coffee, December arabica futures on ICE finished down 3.65 cents, or 2 percent, at $1.8120 per lb as wet weather was expected to aid crop development in Brazil. November robusta coffee futures on Liffe ended down $16, or 0.8 percent, at $1,961 a tonne, holding support just above the 200-day moving average at $1,947.