Raw sugar futures on ICE rose to a 3-1/2 month high on Monday, boosted by fund short-covering against the backdrop of more use of cane in Brazil to produce ethanol rather than sugar. Cocoa prices showed mixed trends, with a weak pound boosting prices in London, while coffee futures edged higher.
March raw sugar was up 0.13 cents, or 0.9 percent, at 15.09 cents per lb by 1450 GMT, the highest for the front month since Aug. 1. "Higher energy prices will continue to draw on global raw sugar supplies by rationing away the anticipated raw sugar surplus into the Brazil domestic fuel pool," Tropical Research Services said in a market note on Monday.
Crude oil prices were hovering around two-year highs on Monday. "A close over 15 cents would be interesting psychologically, but the key short term target remains the September high of 15.20 (for the March contract) followed by the August high of 15.82," said James Liddiard of consultancy Agrilion in a market note. Brazil's centre-south region produced 1.883 million tonnes of sugar in the second half of October, compared with 1.978 million tonnes in the previous two-week period, cane industry group Unica said on Monday.
Dealers said short-covering by speculators had also contributed to recent price strength. March white sugar rose by $3.90, or 1 percent, to $393.20 a tonne. March New York cocoa was off $9, or 0.4 percent, at $2,203 a tonne, with the market suffering a modest setback after its recent climb to a 10-month high.
Most of Ivory Coast's main cocoa-growing regions recorded above-average rainfall and regular sunny spells last week, conditions that farmers on Monday said should help to bolster the crop from early next year. March London cocoa was up 3 pounds, or 0.2 percent, at 1,667 pounds a tonne, buoyed by a weak pound.
Sterling fell by nearly 1 percent on Monday, buffeted by political headwinds that put it on course for its biggest daily loss in more than 10 days. March arabica coffee rose by 0.25 cents, or 0.2 percent, to $1.3115 per lb. January robusta coffee was up $2, or 0.1 percent, at $1,818 a tonne.