Raw sugar taps seven-year low, arabica surges

11 Aug, 2015

Raw sugar futures on ICE dropped to a seven-year low on Monday due to pressure from a large cane crush in top producer Brazil's main growing region, while arabica coffee had its biggest rally in more than four months on heavy short-covering and spreading.
Cocoa futures eased as prices consolidated after Friday's volatile reversal up from a three-month low.
Sugar and cocoa prices bucked the sharply higher trend in larger commodity markets, with the 19-commodity Thomson Reuters CoreCommodity index up a steep 2 percent as the US dollar turned lower.
Raw sugar futures fell for a fourth straight session, initially weighed on by expectations that data from Unica, Brazil's local milling association, would show a jump in cane crush during the second half of July.
The data, released in the final hour of trade, showed that Brazil's main center-south cane crush surged to 49.44 million tonnes, which was at the top end of expectations.
Prices pared losses as traders focused on the region's low sugar production compared with a year earlier.
October raw sugar on ICE touched 10.37 cents a lb, the lowest since June 2008, before settling down 0.09 cent, or 0.8 percent, at 10.57 cents.
"The crush number came in big as did sugar production, but sugar production is still down 1.629 million tons in relation to last year," said Michael McDougall, director of commodities at Societe Generale in New York.
Also down were the sugar/ethanol mix and sucrose level, and these had not been expected to change much, he added. October white sugar closed down $1.60, or 0.5 percent, at $346.90 a tonne.
September arabica coffee settled up 5.7 cents, or 4.5 percent, at $1.335 per lb as prices breached key Fibonacci levels and the 50-day moving average. Total volume soared above 72,000 lots, more than triple the average, preliminary data showed, as September/December spreading buoyed volume.
Carlos Mera, commodities analyst at Rabobank, said coffee bean sizes in top grower Brazil were smaller than the market had been expecting, underpinning prices.
"The crop is very late and very slow. Farmers have been slower than expected to sell their current crop," Mera added.
September robusta coffee closed up $32, or 1.9 percent, at $1,693 a tonne.
December New York cocoa ended down $12, or 0.4 percent, at $3,109 per tonne, while London December cocoa closed down 14 pounds, or 0.7 percent, at 2,082 pounds a tonne.

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