Sugar and coffee up

October 14, 2011

RECORDER REPORT

0 Comments

Coffee and sugar futures vaulted higher Thursday mainly on chart-based buying, while cocoa's early run spurred by bullish consumption data sputtered late in the session. Volume traded in US soft commodities ranged from 5 percent to a quarter below normal. On Wednesday, traded volume in the raw sugar market sank to a 9-1/2 month low.

"You're seeing a lot of short-covering" in sugar and coffee, said The Price Group senior analyst Jack Scoville. New York's December arabica coffee futures soared 8.20 cents or 3.57 percent to close at $2.3765 per lb, the highest settlement close in over two weeks.

London's January robusta coffee futures added $54 or by 2.7 percent to close at $2,004 per tonne. New York's March raw sugar contract jumped 0.90 cent or almost 3.5 percent to finish at 26.91 cents per lb, the highest spot finish in over three weeks. December white sugar futures on Liffe rose $14.60 or over 2 percent to close at $684.10 a tonne, the highest settlement in 3-1/2 weeks. "The chartists will tell you its no surprise as we have a breakout from the recent medium term downtrend (from mid August in raw sugar); and like the trip wires being severed by the escaping sugar bulls, the market has lit up the lights," Thomas Kujawa of Sucden Financial said.

Fundamentally, analysts said coffee bulls may derive some encouragement from excessive rains in South America and Vietnam which could affect the development of the crop in both areas. Traders are wondering if the floods in Thailand, the world's No 2 exporter, would affect output even though initial news from Thailand's Office of the Cane and Sugar Board said only 2-3 percent of total cane plantations are affected by the floods.

Separate floods in Pakistan may also prompt the country to buy around 400,000 tonnes of sugar, brokers said. Scoville said technicians seem to have a target of 27 and 28 cents in the March raw sugar contract. Once March got to 27 cents on Thursday, it quickly backed off, he said.

Dealers said the scope for any significant run-up in coffee prices may be limited by favourable outlooks for crops in top producers Brazil and Vietnam. The harvest in Vietnam should start to gather pace next month when new beans from the harvest pour in and prices stabilise.

Cocoa futures rose after news that Europe's third-quarter 2011 cocoa grind rose 14.0 percent from the same quarter last year to 377,388 tonnes, the Brussels-based European Cocoa Association said on Thursday. New York's December cocoa contract slipped $3 to end at $2,630 a tonne. London's December cocoa contract closed flat at 1,687 pounds a tonne.