Sugar up, rest off as delays in Greece weigh

Monday, 06 February 2012 22:41

NEW YORK/LONDON: Sugar futures clawed higher on Monday while cocoa and coffee eased as the market took stock of further delays to Greece's bailout deal to resolve the continent's prolonged debt crisis.

Greece let yet another deadline slip on Monday for responding to painful terms for a new EU/IMF bailout as patience in Brussels wore thin over drawn-out negotiations among its feuding political leaders.

Raw sugar, for instance, has been caught between better economic data from countries including the US and Germany and bearish fundamentals with additional exports expected from several producers such as No. 2 producer India.

"We're going to (have to) see how the Greek situation plays itself out," said Country Hedging Inc senior analyst Sterling Smith.

March raw sugar futures on ICE rose 0.50 cent, or by 2 percent, to trade at 24.4 cents per lb by 12:09 p.m. EST (1709 GMT). London March white sugar futures were up $8.20 or 1.3 percent to trade at $643.30 per tonne.

Credit Suisse's 3-month and 12-month price forecast pegs raw sugar trading at 24 cents a lb.

"Essentially we've been trading sideways since December," said Tobias Merath, analyst at Credit Suisse.

Indian ministers are meeting on Tuesday to discuss further possible sugar exports, and Pakistan could export the sweetener as well.

Pakistan has approved the export of sugar for the first time in nearly three years, spurred by an expected surplus of more than 1 million tonnes, but the move is unlikely to affect the global market, which has priced in rising output in other countries.

"The fundamentals still seem to favour the bears at the moment and should we rally to the resistance around 24.50 cents is probably a short term sell opportunity," said Thomas Kujawa at brokerage Sucden Financial.

A senior Cargill sugar trader said on Sunday he broadly agreed with recent forecasts by two traders for center-south Brazil sugarcane output of 520 million tonnes in 2012/13.

COCOA AND COFFEE WEAKER

Cocoa futures fell, resuming a downtrend following a small bounce, after Ivory Coast launched its forward sales of the 2012/13 crop.

"Based on technical analysis we're clearly in a downtrend now," said Credit Suisse's Merath. "We're not quite sure whether the rebound we've been seeing is sustainable."

March cocoa on ICE fell $37 or 1.6 percent to end at $2,263 a tonne, while Liffe March cocoa dropped 30 pounds, or almost 2 percent, to finish at 1,472 pounds a tonne.

US cocoa futures were in an inside session dominated by position rolling out of the March contract ahead of first notice day Feb. 15, dealers said.

"All these markets are in their roll period right now," said Drew Geraghty, commodity broker at ICAP North America in Jersey City, New Jersey. "People are getting out of March and rolling out the rest of the board."

The stronger US dollar against a basket of six major currencies also added pressure, dealers said.

"Cocoa's been able to hold the 40-day moving average. Cocoa looks like it wants to remain sideways," Geraghty said. The 40-day MA is $2,223 per tonne.

Arabica coffee futures were steady, consolidating following a rebound from Thursday's six-week low, as dealers contemplated large crops in key producers.

"Brazil (2012/13) and Vietnam (2011/12) are both forecast to produce big crops... this is more than offsetting some of the problems that have occurred in some other producers such as Colombia," said Stefan Uhlenbrock, analyst at F.O. Licht.

"There is a scarcity of certain kinds of beans such as the high quality ones from Colombia, but in general the market is quite well supplied, and you also have to take into consideration that the Brazilians are continuously raising the quality of their beans."

Colombia has produced several below par crops due to adverse weather and a tree renovation programme.

March/May spreading was seen as the session's dominant feature, ahead of the March contract's first notice day Feb. 21, while there was also some May/July spreading seen.

Dealers said there was talk that Vietnam might stockpile coffee again to support prices but details were not clear.

Farmers in Vietnam, the world's largest robusta producer, are holding back about 60 percent of the crop as they wait for domestic prices to improve, trading house SW Commodities said on Monday, more than double normal stocks.