Sugar eases early but Brazil outlook underpins

LONDON: ICE raw sugar futures eased in early trade on Friday as a stronger dollar contributed to a modest setback after the prior session's surge while cocoa and coffee prices were little changed.

SUGAR

* ICE raw sugar futures fell back slightly after the prior session's strong advance, weighed partly by a stronger dollar and weaker oil prices.

* The market remained underpinned, however, by diminishing crop prospects in top producer Brazil which helped to trigger a sharp rise in prices on Thursday.

* October raw sugar on ICE was off 0.12 cent or 0.4 percent at 29.40 cents a lb at 0824 GMT. The contract ended 6.6 percent higher on Thursday.

* Disappointing yields will cut Brazil's 2011/12 production of both sugar and ethanol biofuel below last year's levels, the technical director at Brazil's cane industry association Unica told Reuters on Thursday.

* Dealers said lower production was likely to lead to supply tightness in the current quarter and also heightened concern about the longer-term outlook.

* "A downgrade in production in Centre South Brazil this season could lead to concerns over the following crop, especially as talk has started to flag up the dry weather in the region and the problem of aging cane has not gone away," a European broker said in a daily report.

* August whites on Liffe was off $2.40 or 0.3 percent at $812.40. The front month set a contract high of $821.30 on Thursday.

COCOA

* Cocoa futures were holding steady in early trade with the market looking to consolidate after the recent run-up.

* September cocoa futures on ICE rose a marginal $1 to $3,187 a tonne. The contract has risen steadily after trading as low as $2,881 less than three weeks ago.

* Dealers said prices had risen as the market's focus turned increasingly towards an expected drop in production in 2011/12 which should lead to a tighter global balance after a large surplus in the 2010/11 season.

* They noted concern, however, that any rise in prices could curtail demand.

* Barry Callebaut , the world's largest chocolate maker, fears rising cocoa prices could lead to a slowdown in chocolate consumption, a company official told an industry conference in Indonesia on Friday.

COFFEE

* Arabica coffee prices were marginally higher with the market edging up towards the prior session's three-week peak.

* September arabica coffee futures on ICE rose a marginal 0.20 cent or 0.1 perent to $2.6880 per lb. The contract peaked at $2.7190 on Thursday, the highest level for the second month since June 15.

* Dealers said the market continued to derive support from tight supplies of high quality arabica beans.

* September robusta coffee futures on Liffe edged up $1 to $2,464 a tonne.

* Brazilian exports of coffee in the 2010/11 July/June season totaled 34.9 million 60-kg bags including unroasted green and soluble beans, a rise of 17 percent from 29.8 million bags shipped in the previous season, exporter association Cecafe said on Thursday.

MARKET NEWS

* Asian stocks are set for their third consecutive week of gains on expectations later on Friday of strong US jobs data, which would encourage investors to sustain a shift towards emerging market assets that began last week.

* The euro eased against the dollar on Friday, its bounce from the previous day's low stalling as investors braced for US jobs data, and was seen at risk of extending its recent slide against the resilient Australian dollar.

* Brent crude fell on Friday, after sharp gains a day earlier prompted investors to book profits ahead of a key US jobs report that will provide insight into the pace of economic recovery of the world's biggest oil consumer.

Copyright Reuters, 2011