NEW YORK/LONDON: Raw sugar futures on ICE dropped on Wednesday, joining broader commodity markets lower as the US dollar firmed, while arabica coffee rose to a three-week high as traders eyed short-covering by speculators, who hold a record bearish stance.
SUGAR
October raw sugar settled down 0.2 cent, or 1.4 percent, at 13.72 cents per lb, turning lower after failing to climb above the key resistance level of 14 cents for the second straight day.
Total open interest dropped more than 58,000 lots in the past seven sessions reaching 776,555 lots as of Tuesday, after more than 1.6 million tonnes of sugar were sold against the July contract, exchange data showed.
The 19-market Thomson Reuters CoreCommodity Index fell around 1.5 percent, following seven straight sessions higher, as the dollar index rose while traders awaited the release of the Federal Reserve's minutes and oil prices retreated.
Dealers said the market's focus returned to an expected surplus in the 2017/18 season.
October white sugar settled down $2, or 0.5 percent, at $386.90 per tonne, tracking losses in raw sugar.
The premium of August futures over October surged to a session high of $27.30, the highest for the contract, with dealers pointing to potentially tighter supplies ahead of the European Union's sugar regime change in October.
COFFEE
September arabica coffee settled up 2.3 cent, or 1.8 percent, at $1.30 per lb, after rising to $1.312, the highest for the second position since June 12.
Dealers pegged gains on short-covering by speculators, who were inspired by a steady rise above last month's 16-month low. The September contract, however, was seen facing technical resistance at the 50-day moving average of $1.314.
Data late last week showed speculators held their biggest net short position on record, although the possibility of a global arabica deficit in the 2017-18 season has recently lent some support. [nL1N1JR1M0
"With harvests ongoing, we believe much of the bearish fundamental news have been priced in for now, while robusta prices remain relatively strong despite improved Asian production," said BMI Research in a report.
September robusta coffee settled up $8, or 0.4 percent, at $2,157 per tonne.
COCOA
September New York cocoa settled down $11, or 0.6 percent, at $1,947 per tonne.
September London cocoa settled up 6 pounds, or 0.4 percent, at 1,534 pounds per tonne.
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