Raw sugar on ICE extended losses on Thursday after data from top grower Brazil showed a record cane crush for the first half of April, while the May/July discount widened sharply to a contract low ahead of expiry on Friday. Arabica coffee inched down to a seven-week low, extending losses below technical sell signals amid a strong start to top grower Brazil's harvest. Cocoa fell after reaching 2016 highs on Wednesday, with the market viewed as overbought.
Sugar futures were under pressure from news that Brazil's main cane belt produced a record amount of sugar in an early start to the harvest season. "There is likely to be a big cane crush in the second half of April too," one trade source said. Sergey Gudoshnikov, a senior economist at the International Sugar Organization (ISO), said, "Everybody is expecting a bumper crop in Brazil." July raw sugar settled down 0.13 cent, or 0.8 percent, at 15.71 cents per lb.
The May/July spread widened dramatically to the contract's biggest discount at 0.41 cent. The large discount indicated a lack of interest for the May delivery ahead of the contract's expiry on Friday. However, one trader said the possibility for more-than-expected sugar from Argentina was deterring interest due to the country's extra shipping costs. As of Wednesday, May's open interest was at 20,388 lots, down 13,157 lots from the prior session.
Dealers said delivery against the expiry could also include Brazilian and Central American sugar. August white sugar settled down $3.10, or 0.7 percent, at $457.70 per tonne. July arabica futures settled down 0.55 cent, or 0.5 percent, at $1.2095 per lb, after touching $1.2040, the lowest since March 10.
"The arabica harvest in Brazil has started well and is meeting expectations," one London-based broker said. Technically, arabica charts look weak with the July contract extended losses below the 200-day moving average and falling below the 50-day moving average on Wednesday. July robusta futures settled up $5, or 0.3 percent, at $1,578 per tonne. Cocoa fell from technically overbought levels. July London cocoa settled down 13 pounds, or 0.6 percent, at 2,279 pounds per tonne. July New York cocoa settled down $8, or 0.3 percent, at $3,182 per tonne.