LONDON: Raw sugar futures rose to their highest level in almost two weeks on Thursday, boosted by fund short-covering and potential further downward revisions to Brazil’s production prospects. SUGAR
July raw sugar was up 0.05 cents, or 0.4 percent, at 11.66 cents per lb at 1335 GMT after peaking at 11.70 cents, the highest for the front month since May 4.
Dealers said the market was underpinned by dry weather in top grower Brazil and the continued switch to using more cane for ethanol rather than sugar production.
“It seems for the first time since the end of Feb there has been a potential ‘story’ for the sugar bulls,” said Thomas Kujawa, co-head of the softs department at Sucden Financial. “However, the continued dry weather forecasts will have to persist for some time to come before we witness a consensus shift and further negative Brazil crop revisions,” he added.
Dealers said the market’s improved recent performance had also led to a more constructive outlook on price charts, prompting funds to trim short positions.
August white sugar rose $4.80, or 1.5 percent, to$327.30 a tonne.
COFFEE
July robusta coffee advanced by $16, or 0.9 percent, to $1,753 a tonne.
Dealers said prices were supported by waning selling from Vietnamese producers, who are said to be well sold forward and willing to hold on to coffee at current levels.
Differentials in Vietnam have firmed this week as a result, one dealer said, moving to discounts of roughly $60-$80 a tonne. Differentials collapsed to $100-$120 earlier in the month.
July arabica coffee rose by 1.15 cents, or 1 percent, to $1.1845 per lb.
Dealers said speculators were taking a breather after pushing prices to 3-1/2 week lows earlier in the week, though the market remained vulnerable.
“The funds are very much still not shaken out of their short position and are happy to sell rallies,” another dealer said. “And people see a lot of coffee availability.”
Participants were also monitoring the Brazilian real, which has weakened sharply of late, prompting a selling bout among producers and speculators.
“The real is in a much weaker position, so from a Brazilian perspective it’s attractive (to sell),” the dealer said. “What it has done is take away any bullish momentum that might have been building on the back of short-covering.”
COCOA
July New York cocoa fell $8, or 0.3 percent, to$2,722 a tonne, with the market around the middle of this week’s range of $2,629 to $2,849 in choppy conditions.
July London cocoa rose by 19 pounds, or 1 percent, to 1,914 pounds a tonne.
Source: Brecorder
