Raw sugar futures on ICE jumped more than 3 percent on short-covering on Tuesday, rebounding from the prior session's one-month low as major commodity markets rallied, while arabica coffee fell to the lowest since July on rain in Brazil. Cocoa futures rose above Monday's one-year low but pared gains on abundant nearby supplies. Volume was heavy in the US markets due to March/May spreading as first notice days for the March contracts approached, traders said.
Raw sugar futures soared on short-covering and technical buying after the market found strong support just below Monday's one-month low. March raw sugar futures closed up 0.25 cent, or 1.8 percent, at 14.47 cents a lb after jumping 3.7 percent to 14.74 cents, moving within Monday's wide session range.
Traders said the prior session's tumble was overdone and that the surge of nearly 18,000 contracts in total open interest indicated many new short positions had piled into the market, leading to short-covering on Tuesday. The rally triggered buy stops around 14.67 cents, basis March, quickly taking prices to the session highs.
March white sugar ended up $5.90, or 1.6 percent, at $377.70 a tonne. Arabica coffee futures tapped the lowest level since July 2014 as forecasts for much-needed rain in top grower Brazil eased crop concerns, traders said. March arabica coffee futures settled down 1.7 cents, or 1 percent, at $1.6075 per lb, after dipping to $1.5840, the lowest since mid-July 2014.
"There's a good amount of liquidation," one US trader said about the March contract ahead of first notice day on February 19. May robusta coffee futures fell $9, or 0.5 percent, to close at $1,939 a tonne. Cocoa prices advanced as the outlook for the April-to-September mid-crop was less favourable as farmers in Ivory Coast's production heartland said the dry weather and high temperatures risked delaying the upcoming mid-crop.
"Players are starting to discuss mid-crop forecasts and the range is roughly 420,000-480,000 tonnes for Ivory Coast, so lower than last year's 'monster,'" said Eric Sivry, head of agricultural options brokerage at Marex Spectron. "The canopy looks good but the flowering is slightly disappointing." March New York cocoa settled up $19, or 0.7 percent, at $2,691 a tonne, after rising to $2,732 in early dealings while pulling away from Monday's one-year low of $2,669. London May cocoa futures closed up 15 pounds, or 0.8 percent, at 1,883 pounds a tonne.