LONDON: Raw sugar prices on ICE fell on Wednesday for a third day as fund short covering ran out of steam and as oil and corn prices continued to retreat, while arabica coffee edged up off a three week low.
SUGAR
July raw sugar fell 0.1 cent, or 0.8pc, to hit a one week low of 12.51 cents per lb by 1031 GMT. Prices hit a 1-1/2-month high on Friday.
Sugar has been supported of late by dry weather in India, a top sugar grower, and by surging corn prices, though these have retreated this week, along with crude oil.
Falling crude oil prices tend to weigh on ethanol prices, tempting Brazilian cane mills to produce more sugar and less ethanol. Cane is a feedstock for both products.
Rising corn prices meanwhile raise corn-based ethanol prices in the United States, tempting Brazilian mills to produce and export more cane-based ethanol, again at the expense of sugar.
Marex Spectron analyst Robin Shaw said the funds have paused covering their short positions amid a retreat in oil and corn prices this week. He added, however: "Our technical analysis suggests they are probably still getting signals to resume buying."
In news, US ethanol makers are considering buying corn from Brazil to guarantee supply as domestic prices for corn soar.
August white sugar rose $0.80, or 0.2pc, to $334.40 per tonne.
COFFEE
September arabica coffee edged up 0.05 cents, or 0.05pc, to 96.65 cents per lb, having hit a three-week low of 96.35 cents on Monday.
Prices plunged 5.3pc last week amid renewed concerns about oversupply in top grower Brazil and a technical market structure that rewards sellers.
The coffee market has also been pressured by contract expiries, with the first notice day for the July contract set for Thursday, prompting some traders to roll out of or liquidate their positions.
September robusta coffee fell $5, or 0.4pc, to $1,367 per tonne.
COCOA
September London cocoa was flat at 1,850 pounds ($2,328) per tonne.
The contract hit an 11-month high last Wednesday as top growers Ivory Coast and Ghana announced plans to set a floor price for cocoa.
Bad weather and crop disease have also hampered the cocoa crop in Ghana.
September New York cocoa rose $6, or 0.2pc, to $2,506 per tonne.
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