NEW YORK/LONDON: Soft commodity futures traded mixed on Monday after an early advance sparked by a bailout for Spain's banking sector petered out, as investors pondered details of the deal and apprehensively eyed a weekend election in Greece.
Sugar futures climbed, while coffee and cocoa ended lower as initial elation over Spain's $125 billion rescue package ran into doubts about how the deal would be implemented.
"I do think we are going to have a lot of back-and-forth trading across the softs complex," said Sterling Smith,vice-president of commodity research at Citibank's Institutional Client Group in Chicago.
Benchmark July raw sugar futures rose above the psychologically important level of 20 cents per lb and gained 0.49 cent, or 2.45 percent, to end at 20.47 cents a lb. The contract had touched 18.86 cents on June 4, the lowest level for the front month since August 2010.
London August white sugar futures put on $10 or 1.73 percent to close at $587.50 per tonne.
"It has helped investor appetite for risk. It's speculative-led short-covering," James Kirkup, head of sugar brokerage at ABN AMRO (Markets) Ltd, said of Spain's rescue deal.
Thomas Kujawa of brokerage Sucden Financial added: "In the short term, we would expect strong resistance from 20.50 to 21 cents a lb."
Expectations of a big surplus in global supplies have weighed on the sugar market, and traders believe such sentiment would cap a strong advance.
Thailand, the world's second-biggest sugar exporter, revised up its forecast for 2012/13 production to a record 10.4 million tonnes and aims to produce more every year to supply rising consumption in Asia, a top industry official said.
Short-covering by speculators almost eradicated their net short position in sugar, while they continued to build net shorts in arabica coffee and cocoa futures and options in the week to June 5, US regulatory data showed on Friday.
Speculators switched to a net short position in white sugar futures and options on NYSE Liffe in the week to June 5, exchange data showed on Monday.
COFFEE AND COCOA CLOSE LOWER
Coffee futures finished easier after their advance sputtered when late speculative sales hit.
Arabica September coffee futures closed down 0.70 cent at $1.567 per lb. The September robusta coffee contract eased $7 to end at $2,071 per tonne. Second-month futures had hit an eight-month high of $2,269 on May 28.
Expectations of a big harvest in Brazil have weighed on arabica prices. Tight stocks have sustained the robusta market at near eight-month highs.
US coffee roasters quietly pulled off a financial feat last year that went unnoticed by most customers. They added a higher proportion of cheaper, lower-grade robustas to their grounds as the price of top-notch arabica beans surged.
Cocoa futures ended lower.
ICE July cocoa slipped $3 to close at $2,197 per tonne and Liffe September cocoa futures shed 8 pounds to finish at 1,513 pounds per tonne.
"There is some talk of Ghanaian origin selling above the market," one London broker said.
Cocoa arrivals at ports in top grower Ivory Coast reached around 1,182,000 tonnes by June 10, exporters estimated on Monday, compared with 1,183,384 tonnes in the same period of the previous season.
Liberia closed its border with cocoa producer Ivory Coast on Saturday but did not confirm the claim by Abidjan that gunmen who killed seven United Nations peace keepers, eight civilians and a soldier had come from its territory.
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