Raw sugar futures edged slightly higher on Wednesday as the market waited for clearer indications about when India might import, while arabica coffee also advanced. March raws were up 0.09 cent, or 0.4 percent, at 20.67 cents per lb at 1516 GMT. The front month rose to a peak of 20.99 cents on Tuesday, but met resistance around 21 cents.
Drought has curtailed production in the western state of Maharashtra and the southern state of Karnataka, boosting domestic prices and raising the prospect of Indian imports.
On Tuesday, a government official said the country could produce 22.5 million tonnes of sugar during the 2016/17 season that started on October 1.
But traders said production could fall below 20.5 million tonnes in the current season. Tropical Research Services said in a market note on Wednesday the government's reluctance to cut its production estimate and reduce import duties may reflect political concerns as it courts farmer votes in elections in Uttar Pradesh. "This could lead to continued denials of flagging Indian sugar production and lead to further inaction with regard to India sugar imports ... at least until the middle of February 2017 (when West Uttar Pradesh finishes polling) or until the end of polling in the entire state of Uttar Pradesh, which would be the middle of March 2017," TRS said.
March white sugar was up $1.70 or 0.3 percent at $542.60 per tonne. Arabica coffee futures resumed their recent advance after the prior session's retreat from a two-month high.
March arabica coffee was up 1.4 cents or 0.9 percent at $1.5375 per lb. The front month climbed to a two-month peak of $1.5695 on Tuesday before turning lower. Dealers said speculators had been rebuilding long positions this month after reducing them sharply in the last two months of 2016. "Industry are priced out of arabica at these prices. It (the rise) is almost entirely spec-driven," one dealer said.
March robusta coffee was up was up $22 or 1.0 percent at $2,234 a tonne. Dealers said there was some hedge selling early in the day related to last minute trade in Vietnamese supplies ahead of the Tet holiday which begins on Thursday. Little activity in Vietnam is now expected until after the holiday which runs until February 1. Cocoa futures were lower as the market continued to be weighed by a favourable crop outlook in top grower Ivory Coast and the prospect of a global surplus this season. March cocoa in London was down 14 pounds, or 0.8 percent, at 1,743 pounds a tonne. March New York cocoa fell $23 to $2,178 a tonne.