Raw sugar futures on ICE rose for the second straight day on Wednesday, buoyed by chart-based buying and talk of heavy vessel nominations for the record May delivery that helped tighten the July/October spread to the smallest discount in three months. London cocoa futures turned lower after matching the previous session's eight-week peak, while coffee fell to two-month lows on a flurry of sell orders that pushed prices lower.
Raw sugar futures firmed, buoyed by talk that vessels have been nominated for a large amount of the delivery against the May contract, though technical buy signals also caused short-covering, traders said. "You're getting some more short covering from the spec community. In July, the trade was short, so that was a crowded trade," one US trader said.
July raw sugar futures settled up 0.12 cent, or 0.9 percent, at 12.87 cents a lb, while the July/October spread narrowed for the second straight day, reaching a discount of 0.35 cent, the smallest since February 10. August white sugar futures ended up $1.40, or 0.4 percent, at $373.50 a tonne. Cocoa initially extended its rally on Tuesday after senior government sources in Ghana, the world's second-biggest cocoa grower, reduced the country's 2014/15 crop estimate.
Prices on both the New York and London markets turned lower after the buying dried up. July New York cocoa ended down $24, or 0.8 percent, at $2,919 a tonne. London July cocoa closed down 16 pounds, or 0.8 percent, at 2,006 pounds a tonne after rising to 2,028 pounds, matching Tuesday's peak, the highest level for the second position since March 9.
A London-based broker noted that high volatility in sterling before the May 7 British election could affect trade in pound-denominated London cocoa futures. A weak pound can weigh on New York cocoa prices while supporting prices in London. Arabica coffee futures fell in above-average volume, extending losses as sell-stops were triggered below recent session lows. July arabica settled down 3.70 cents, or 2.8 percent, at $1.2995 per lb, while July robusta coffee ended down $42, or 2.4 percent, at $1,736 a tonne. Both contracts fell to the lowest since March 13.