ICE raw sugar futures rose to 17 cents per lb for the first time in 1-1/2 years on Thursday, on strong charts following the prior session's 4.9 percent surge, though Asian producer selling weighed on prices earlier. Cocoa futures fell to a three-week low, joining the session's trend, with the 19-commodity Thomson Reuters CoreCommodity Index down on the day. Robusta coffee extended gains to a six-month high, with traders pointing to concern about dryness in Southeast Asia, and arabica coffee inched up to a three-week top on chart-based buying.
Sugar dealers said producers in Asia had sold into the stronger prices after Wednesday's speculative rally, which took traders who follow fundamentals by surprise. ICE July raw sugar settled up 0.21 cent, or 1.3 percent, at 16.98 cents per lb, with traders noting buy-stops were triggered around 16.87 cents, taking prices to 17 cents, the highest since October 2014.
The July/October spread has narrowed sharply from a 0.39 cent discount on Tuesday, the biggest for the contract, to 0.22 cent on Thursday. One broker said this was due to concerns over wet weather in center-south Brazilian cane areas. "Now we're having rain that could temporarily hold up production," one European trader said. Maryland-based forecaster MDA Information Services said showers in Brazil's center-south region over the next 10 days will limit dry-down efforts and slow early harvesting.
Sugar prices are also supported by a shift to a global deficit after years of surpluses, with concerns over dry conditions in Asian producers such as India. August white sugar settled up $4.30, or 0.9 percent, at $484.10 per tonne, the highest since June 2014. Coffee prices extended their steady rise. July robusta coffee futures settled up $7, or 0.4 percent, at $1,678 per tonne, after touching a six-month high of $1,684, matching the high reached on November 5 on a continuation chart.
"If resistance around $1,685 holds firm, we could see prices consolidate," Sucden Financial Research said in a note. July arabica settled up 0.3 cent, or 0.2 percent, at $1.3005 per lb, up for the seventh straight day, after touching a three-week high of $1.307. London July cocoa settled down 30 pounds, or 1.3 percent, at 2,213 pounds per tonne and New York July cocoa settled down $50, or 1.6 percent, at $3,020 per tonne, the lowest since April 18 for both contracts. The market ignored dry weather concerns in No 2 cocoa grower Ghana.