ICE sugar futures extended their rally on Monday amid uncertainty over how much sugar would be delivered against the October contract, due to expire on Tuesday. Arabica coffee rose on concerns about drought-related crop damage in Brazil, while ICE cocoa traded flat, poised for a sixth straight quarterly gain. Raw sugar on ICE Futures US extended last week's 14-percent rally in heavy, spread-related gyrations ahead of Tuesday's expiration of the October contract.
ICE October raw sugar gained 0.25 cent, or 1.6 percent, to settle at 15.66 cents a lb, extending a rally on talk that mills in China and Dubai had bought sugar in the cash market at steep discounts. That would remove some of the Thai stocks said to be available for cash delivery against the contract. Worries over huge inventories had pressured spot prices to a 4-1/2-year low of 13.32 cents a lb on September 17.
All eyes were fixed on the expiry amid a "great amount of uncertainty," said James Liddiard, an analyst with Agrilion Commodity Advisers in New York. Prices were also underpinned by last week's cane industry data highlighting a slowing cane crush in top producer Brazil. Weekly US government data released on Friday after market close showed speculators boosted their bearish sugar bet to the largest since February, prompting short-covering on Monday.
Traders have largely rolled their positions into the most-active March contract, which gained 0.24 cent, or 1.4 percent, to settle at 16.80 cents a lb. The October contract was at a discount of just over 1 cent to March at market close. Liffe December white sugar traded up $4.00, or 0.9 percent, at $432.10 a tonne. ICE December cocoa settled unchanged at $3,311, as traders waited to see if fears of Ebola spreading to top-producer Ivory Coast, which had supported the market, were legitimate.
"The fear level's been put in. Now we have to see if it will actually come true," said Jack Scoville, a vice president with Price Futures Group in Chicago. The spot ICE cocoa contract was on track for a 5.6 percent third-quarter gain. That would mark the spot contract's longest string of quarterly gains since an eight-quarter streak that ended in 1977. March cocoa in London was down 1 pound, or 0.05 percent, at 2,075 pounds a tonne.
December arabica coffee futures rose 5.2 cents, or 2.8 percent, to settle at $1.9125 a lb in low-volume trading in response to bullish predictions released Friday for production in top-grower Brazil, where the 2015/16 crop has been threatened by a protracted drought. Liffe November robusta coffee futures rose $8 or 0.4 percent, to $1,963 per tonne.