Raw sugar futures on ICE steadied on Wednesday, while spread trade dominated dealings before a contract expiry that extended the spot contract's premium at a 2013 high on tight nearby supplies, while cocoa rose to three-week highs. Arabica coffee futures corrected higher, respecting a strong technical support level and staying close to the March options strike price of $1.60 before expiry on Wednesday.
In raw sugar, the March/May spread traded as high as a 0.13 cent premium, the highest since November 2013 and up from Tuesday's settlement at 0.03 cent. The March contract will expire February 27. "The spreads are showing bullish signals as the trade seem to be suggesting there is tightness in the (Brazil) inter-crop period," said Thomas Kujawa, co-head of the softs desk at Sucden Financial Sugar.
ICE March raw sugar futures settled flat at 14.71 cents per lb. Total volume reached a one-year high on Tuesday at nearly 345,000 lots as index funds rolled their positions forward, when open interest fell 77 lots from the prior session, the first drop in 11 sessions, exchange data showed. March white sugar futures closed down $6.80, or 1.8 percent, at $377 per tonne ahead of expiry on Friday, when dealers expect a small quantity of Central American white sugar.
New York cocoa futures rose for the seventh straight session on concern about mid-crop output in the world's top two producers Ivory Coast and Ghana. "The fact that Ghana and Ivory (Coast) are not selling their massive 2015/16 crops is the biggest reason the market is going up," said John Palabrica, president of MJMB LLC, a private commodity trading company in Newark, Delaware.
Most-active May New York cocoa on ICE closed up $16, or 0.6 percent, at $2,884 a tonne. May London cocoa futures ended up 14 pounds, or 0.7 percent, at 1,981 pounds a tonne. Both contracts reached the highest levels since January 21. Arabica coffee firmed, respecting support levels around $1.60 after the prior day's roughly 5 percent dive. The March contract hugged the $1.60 area, the most active put strike price in March options that saw implied volatility soar to its highest level above 50 on Tuesday. March arabica coffee futures settled up 0.05 cent at $1.5945 per lb. May robusta coffee closed up $3, or 0.2 percent, at $1,974 a tonne.