Sugar rises, arabica coffee strengthens

25 Jan, 2017

Raw sugar futures were higher on Tuesday, boosted mainly by technically-driven buying after the market's recent strong performance, with the market also keeping a close eye on production in top consumer India. March raws were up 0.18 cents, or 0.9 percent, at 20.82 cents per lb by 1454 GMT, having peaked earlier at 20.99 cents.
Dealers said the market had tested resistance at the upper band of the 20-21 cent range after finding support at 20.05 cents on both Thursday and Friday last week.
One dealer said that "21 cents would seem to be a key area", adding: "Most bulls would want to see the other side of that today to see if there are any (buy) stops resting."
Dealers said attention is also focused on India, where a poor crop and rising domestic prices had raised the possibility that the world's second-largest producer could need imports.
India has retained its sugar output forecast for the 2016/17 season at 22.5 million tonnes, a government official said, after a meeting of representatives from India's leading sugar-producing states.
Dealers said there was scope for a downward revision in the near future, with an improved outlook in Uttar Pradesh more than offset by diminishing prospects in Maharashtra and Karnataka, where drought has ravaged crops.
Analyst Green Pool recently cut its estimate of India's sugar production by 1 million tonnes to 20.5 million tonnes.
Dealers said that any imports by India now appear more likely to be whites and later in the season.
March white sugar was up $2.20, or 0.4 percent, at $543.20 a tonne.
In coffee, Arabica futures rose to a two-month high, with March up 1.20 cents, or 0.8 percent, at $1.5660 per lb after earlier peaking at $1.5680.
Dealers said that funds appeared to be rebuilding a net long position in arabica after cutting bullish bets towards the end of last year.
The strength of robusta coffee prices has encouraged buying in arabica futures, though the former market has retreated to some extent from last week's 4-1/2 year high.
March robusta coffee was down $10, or 0.4 percent, at $2,238 a tonne. The second position had risen to a peak of $2,268 on Friday, its highest since May 2012.
Cocoa futures were higher, regaining some ground after a prolonged slide in prices on expectations of a significant surplus in the current 2016/17 season. March cocoa in London was up 16 pounds, or 0.9 percent, at 1,762 pounds a tonne. March New York cocoa rose $37, or 1.7 percent, to $2,202.

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