Raw sugar futures on ICE turned sharply higher on Monday, buoyed by a rally in the March/May spread amid talk of nearby demand, while cocoa markets came off two-month highs reached earlier in the session. March raw sugar settled up 0.27 cent, or 2 percent, at 13.9 cents per lb, changing direction after falling to 13.28 cents. Traders said the rally was triggered by a shift in the March/May spread, with March shifting to a 0.05 cent premium over May versus the prior session's discount of 0.05 cent.
Talk of demand for the March contract, which will expire at the end of February, spurred the move, traders said. The rally came after data showed late Friday that speculators raised their net short position in raw sugar futures and options to a record 175,421 contracts in the week to January 30. On Friday, total open interest rose by 9,053 contracts to 952,483 contracts, the highest since April 2008, ICE data showed.
May white sugar followed raw sugar higher to settle up $3.50, or 1 percent, at $364.30 per tonne, after falling to $355.70. March London cocoa settled up 2 pounds, or 0.1 percent, at 1,457 pounds per tonne, after rising to the highest since November 30 at 1,471 pounds. Prices were supported by the British pound, which slipped on Brexit negotiation worries.
March New York cocoa settled down $14, or 0.7 percent, at $2,045 per tonne, after rising to $2,067, also hitting its highest since late November. The weak British pound versus the US dollar also pressured the New York market, traders said. Cocoa arrivals at ports in top grower Ivory Coast reached about 53,000 tonnes between January 29 and February 4, up from 43,000 tonnes during the same period last season.
March arabica coffee settled down 0.6 cent, or 0.5 percent, at $1.198 per lb. Total open interest rose by 3,862 lots on Friday to a record 246,349 lots, ICE data showed. March robusta coffee settled up $16, or 0.9 percent, at $1,780 per tonne.
Global coffee supplies will shift to a surplus in 2018/19 with top grower Brazil on track to harvest a record crop, but prices will rise modestly by the end of the year, a Reuters poll of 14 traders and analysts showed.