NEW YORK/LONDON: ICE raw sugar futures extended their gains and hit a four-month high on Friday, with March's steep premium over the May contract easing slightly, while cocoa consolidated in mixed dealings and coffee futures rose
Raw sugar felt a lift on concerns about nearby supplies, rising energy prices and the weak US dollar after the euro gained against the greenback after this week's bailout deal for Greece and better-than-expected German data.
"There are logistical issues in Europe and Brazil is in between seasons. Apparently Thailand is selling most of their stock to China, and India is also having some logistical issues," said Jack Scoville, a vice president at The Price Group in Chicago.
March raw sugar on ICE rose 0.14 cent or 0.5 percent to 26.08 cents a lb, by 12:35 p.m. EST (1735 GMT), after hitting a 3-1/2 month high at 26.28 cents. Benchmark May climbed 0.24 cent to 25.10 cents per lb, after reaching a four-month top at 25.25 cents.
Dealers monitored the front-month premium, which indicated the potential for a large delivery. There was also a widening premium for May over July .
"The implication is that, should the expected large receiver of the March commit to the tonnage and has a home for it, this would absorb available sugars for the May delivery," Nick Penney at broker Sucden Financial said in a market note. ICE March raw sugar futures traded at a 0.98 cent premium to May , down from 1.08 cents at Thursday's close.
London May white sugar futures rose $9.60, or 1.56 percent, to $661.80 per tonne.
"If the slowdown we've seen in US ethanol production remains, we could start to see a rise in US demand for Brazil ethanol, which could support sugar prices," said Lysu Paez Cortez, a commodities analyst at Natixis.
Cocoa futures on ICE were slightly higher, with May closing up $13 at $2,357 a tonne. March closed at a $13 premium to May, narrowing from $27 on Thursday.
"The arrivals have been short here the last several weeks," Scoville said, noting a reason for March's premium.
"That does tighten up supplies and if you need supplies nearby, you're probably just as good getting them off the board."
The market consolidated after Thursday's sharp fall as more in the industry were expected to participate in Ivory Coast cocoa auctions.
"There are many things unresolved, but the (Ivorian) government has said they will do everything to resolve those issues," said a European trader.
AUCTION PARTICIPATION TO PICKUP
The GEPEX group of exporters, which accounts for about 55 percent of Ivory Coast's cocoa exports, has agreed to end its boycott of auctions, three industry sources told Reuters on Thursday.
"GEPEX recognises that the system remains in its early stages and there are a number of significant financial and operational concerns that still need to be resolved," the group said in a statement.
Liffe May cocoa futures closed down 6 pounds at 1,513 pounds per tonne, after turning lower late in the session.
Robusta coffee futures trading on Liffe rallied for the second straight day as slow exports from Vietnam have caused the industry to draw down stocks held in European warehouses, with Vietnames producers reluctant to sell.
Robusta coffee futures on Liffe were firm, with May up $38, or 1.9 percent, at $2,056 a tonne, a 2-1/2 month high.
Dealers noted the tight structure, with March futures near level with May and May trading at a $35 premium to July .
Certified coffee stocks held in NYSE Liffe nominated warehouses fell to 210,490 tonnes as of Feb. 20 from 226,690 tonnes on Feb. 6, exchange data showed.
"There's quite a lot of coffee in Vietnam, but there's not much held by the trade - there's a lot held by farmers," said a London-based broker.
Vietnam robusta beans returned to premiums against Liffe for the first time in at least three weeks as farmers, middlemen and exporters held back stocks, waiting for the London futures to rise further, dealers said on Friday
Arabica coffee futures on ICE edged higher, stuck within the lower trading range established in the past week as the market appeared to be looking for a bottom.
May arabica coffee rose 1.55 cents, or 0.77 percent, to $2.0360 per lb.
Brazil's forthcoming 2012/13 coffee harvest should turn out 53.9 million 60-kg bags, exporter Terra Forte said on Thursday, raising its November estimate by 1.4 million bags due to hopes for record robusta production.
"Good prospects for Brazilian output may be weighing on prices, despite the fact we've seen the Colombian crop downgraded," Natixis' Paez Cortez said.
Copyright Reuters, 2012
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