Raw sugar futures on ICE extended losses to set a 16-month low on Wednesday as traders shrugged off lower-than-expected cane data from top grower Brazil's center-south region and the July contract's discount to October narrowed ahead of its expiry. October raw sugar settled down 0.13 cent, or 1 percent, at 12.76 cents per lb, its lowest since February 2016.
The discount of July, which will expire on Friday and had open interest of 64,526 contracts as of Tuesday, versus October narrowed briefly to 0.18 cent from 0.24 cent in the prior session. Brazil's center-south region produced 2.379 million tonnes of sugar in the first half of June, cane industry group Unica said.
This was up from the last half of May but below expectations. The percentage of cane turned into sugar versus ethanol, however, was lower than some expected, traders said. Traders said that speculators, who are holding their biggest net short position in nearly two years, probably want to keep prices lower as the conclusion of the second quarter approaches on Friday.
August white sugar settled down $2.10, or 0.5 percent, at $386.80 per tonne. September London cocoa settled up 1 pound, or 0.1 percent, at 1,497 pounds per tonne with gains capped by a rise in the value of sterling against the dollar. September New York cocoa settled up $21, or 1.1 percent, at $1,884 per tonne.
Dealers said the market was awaiting clearer indications on the prospects for main crops next year in West Africa, with pod counters beginning to assess the outlook. Dealers said the expiry of London July options on Friday would provide a short-term focus.
September arabica coffee settled down 0.9 cent, or 0.72 percent, at $1.244 per lb. "Despite the recent bounce, there still remains a threat on the downside, and if prices break, this week's low at 123.60 (cents per lb)," Sucden Financial said in a market note.
"Fundamentally the markets encounter (the) general perception that with the contribution of a lower Brazil arabica coffee crop this year, that the arabica coffee supply shall start to tighten up and remain so, for at least the first nine months of the forthcoming October 2017 to September 2018 coffee year," said coffee trader I&M Smith in a report. September robusta coffee settled up $6, or 0.3 percent, at $2,092 per tonne.