Sugar firm in light trade, coffee mixed

Thursday, 19 January 2012 00:00

NEW YORK/LONDON: Soft commodity futures were a mixed bag in fairly slow business Wednesday as a lack of significant news kept most big players on the sidelines.

Sugar was firm, coffee was mixed and cocoa was slightly lower. Volume in New York soft commodities ranged from a third to almost 50 percent below their 30-day averages, Thomson Reuters data showed.

"I think everybody is truly on a wait-and-see mode," Country Hedging Inc senior analyst Sterling Smith said.

March raw sugar futures on ICE rose 0.15 cent to trade at 24.01 cents per lb at 12:06 p.m. EST (1706 GMT).

London March white sugar futures were up 80 cents to trade at $629.50 per tonne in thin volume of 1,911 lots.

"It's better to sell into a rally than buy into a dip," said Thomas Kujawa of broker Sucden Financial.

Jonathan Kingsman, head of consultancy Kingsman SA, said tight availability of Central American sugars was supporting prices, but he said that he saw downside sugar price risk as the harvest in top grower Brazil approached.

Dealers said the market remained rangebound, however, with the upside capped by large crops in the European Union and Russia as well as the prospect of further exports from India. Recent rains in Brazil eased concerns over the production outlook in the world's number 1 sugar producer, they explained.

COCOA SLIPS, COFFEE MIXED

Cocoa futures settled lower.

London's March cocoa futures was down 1 pound to finish at 1,503 pounds per tonne. New York's March cocoa contract shed $5 to close at $2,265 a tonne.

"If we sell off again people are going to be looking to bounce off the bottom again," said Hector Galvan, senior market strategist for RJO Futures.

"Funds are the major players in the market today, initially doing some short-covering and then the market turned right back down," he added.

Dealers noted concern about the demand outlook after a lower-than-expected 1.8 percent rise in the European cocoa grind in the fourth quarter of 2011 and a 7.4 percent fall in the Malaysian grind during the same period.

Demand for chocolate is improving by the month, even in the more difficult markets of Southern Europe, the chief executive of chocolate-maker Barry Callebaut said in an interview on Tuesday.

The market remained supported, however, by fears that dry winds in Ivory Coast may curtail production.

"While demand indicators are coming in weaker than expected, the cocoa market is underpinned by fears that dry weather and the Harmattan winds in the Ivory Coast may weigh on production," Barclays Capital said in daily market update on Wednesday.

Coffee was mixed.

March arabica coffee futures eased 0.15 cent to trade at $2.25 per lb at 12:08 p.m. March robusta coffee on Liffe added $6 to trade at $1,854 a tonne at 12:09 p.m..

Dealers said the market continued to derive support from below-par production in Colombia.

Premiums of Vietnamese coffee prices to London futures narrowed in recent days following falls in futures prices, and trading has slowed after a brief pickup late last week before a long holiday, traders said on Tuesday.

Coffee exports from Nicaragua dropped to 52,120 60-kg bags in December, 45.7 percent less than was exported in the same month last year, the country's export board said on Tuesday.