NEW YORK/LONDON: The benchmark raw sugar contract on ICE eased on profit-taking and a technical correction on Tuesday, breaking a three-day streak after the market's explosive rally lifted prices to the highest level in more than four years.
Arabica coffee futures surged to a 1-1/2-year peak after breaching a recent session high, while traders focused on dry weather delaying crop flowering in top grower Brazil.
Cocoa was mixed. March raw sugar settled down 0.05 cent, or 0.2 percent, at 22.7 cents per lb, just below Monday's high of 22.95 cents, the highest level in more than for years. All other contracts closed higher.
Raw sugar prices on Friday had rallied as much as 8 percent, and one US trader said Tuesday's decline "looks like profit taking."
"I think Friday's rally was too strong," said Claudiu Covrig, an analyst with S&P Global, adding that a downward correction had been anticipated.
Dealers said the rise had been fueled by technically driven buying after the market broke out of its recent trading range while a strengthening in Brazil's real currency added to bullish sentiment.
December white sugar settled up 90 cents, or 0.2 percent, at $588.30 per tonne. Arabica coffee futures rallied 1.7 percent in just two minutes after breaching the Sept. 8 high of $1.557, triggering buy stops, traders said.
December arabica settled up 4 cents, or 2.6 percent, at $1.568 per lb, after rising to $1.578, the highest level for the second position on a continuation chart since February 2015.
Also supporting the market were forecasts for continued dry weather in most of Brazil's coffee regions, which will prevent the initiation of coffee flowering.
"The lack of rain in Minas Gerais is starting to catch the attention of the market," said Jack Scoville, vice president with PRICE Futures Group in Chicago, about Brazil's main arabica region. "Most producers in the region talk of losses and more traders feel that production in Brazil could be less than 50 million bags."
November robusta coffee settled down $5, or 0.3 percent, at $1,955 per tonne.
Exchange data showed that total open interest has fallen the past four sessions, even as prices rose to 1-1/2-year highs on Monday.
Cocoa was mixed with the weakness of sterling helping to support London prices while pressuring the dollar-denominated New York market. London December cocoa settled up 7 pounds, or 0.3 percent, at 2,305 pounds per tonne, while New York December cocoa settled down $6, or 0.2 percent, at $2,866 per tonne.
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