White sugar futures jumped to a two-week high on Wednesday, as potentially tight short-term supply spurred short-covering and briefly lifted the December contract to a premium over March for the first time in six months. Arabica coffee pared losses after touching a three-month low.
December white sugar settled up $10.20, or 2.8 percent, at $375.70 per tonne, after climbing to a two-week high at $377. December sugar briefly rose to its first premium over March in six months at 50 cents, from a discount of as much as $12 three weeks ago, boosted by concerns about nearby supply tightness, traders said.
Traders also noted that the bulk of an expected large crop in the European Union may not be available to tender against December and was more likely to weigh on the March 2018 contract. "I think it is short covering from people who thought December was going to be awash with EU sugar," one dealer said.
March raw sugar settled up 0.21 cent, or 1.5 percent, at 14.25 cents per lb, with traders citing spillover support from the white sugar rally. December arabica coffee settled down 0.3 cent, or 0.2 percent, at $1.2515 per lb after dipping to a three-month low of $1.2440 as rains in Brazil improved the crop outlook in the world's top grower.
"Relatively drier conditions the next 10 days will allow dryness to persist while stressing early coffee flowering," said Maryland-based meteorologist MDA Information Services in a daily research note. "A lot of this news is washing the other out," said Peter Mooses, senior market strategist for RJO Futures in Chicago, about the bearish impact of the much-needed rains in Brazil and forecasts for drier conditions.
November robusta coffee settled down $6, or 0.3 percent, at $2,015 per tonne. December New York cocoa settled down $4, or 0.2 percent, at $2,078 per tonne, after rising to the front-month contract's highest level since April 6 at $2,102. Early support came from indications that an anticipated global surplus in the 2017-18 season may be smaller than expected, partly reflecting lower projections for production in the Dominican Republic following recent hurricanes. Dealers said weak prices in recent months may also curb production in countries such as Indonesia. December London cocoa settled up 4 pounds, or 0.3 percent, at 1,558 pounds per tonne.