Raw sugar gains on short covering, weather woes

Fawad Maqsood July 29, 2019

LONDON: Raw sugar on ICE rose on Monday as fears over adverse weather in key producing regions and falling output in Brazil combined with fund short covering to push prices up.

SUGAR

October raw sugar rose 0.13 cents, or 1.1pc, to 12.15 cents per lb at 1149 GMT.

Speculators sharply increased their net short position in raw sugar on ICE Futures US in the week to July 23 to its highest in eight weeks, data showed.

Sugar hit a two-month low on July 23 but finished last week up 3.7pc.

“Funds haven’t covered (their shorts) much, they still carry a fairly sizeable short,” said a dealer. He added more short covering was likely given adverse weather in India, Europe and Thailand, and falling output in Brazil

Brazil’s center-south 2019/20 sugarcane crop is forecast in a range between 559 and 570 million tonnes, down from 573 million tonnes in the previous season, agricultural research body Pecege said.

In news, farmers who own shares in Australia’s Mackay Sugar have voted to accept a takeover offer from Germany’s Nordzucker.

October white sugar was up $4.5, or 1.4pc, at $325.50 a tonne, having hit its highest in nearly a month at $325.60.

COFFEE

September arabica coffee was down 0.1 cents, or 0.1pc, at 99.65 cents per lb, after hitting a one-month low on Friday.

* Speculators boosted their bearish bet in arabica by 2,803 contracts in the week to July 23..

Arabica shed 5.8pc last week, its worst weekly performance in nearly two years.

Prices have slipped after frost in top-grower Brazil earlier this month did not damage as much of the coffee crop as many had expected.

Mexico said it would help Honduras create 20,000 jobs this year and support its coffee farmers as the two countries seek to curb migration to the United States.

September robusta coffee was down $19, or 1.4pc, at $1,354 a tonne, having hit its lowest since late May at $1,354.

Vietnam’s coffee exports in the first seven months of the year likely fell 7.6pc from a year earlier, data showed.

COCOA

September New York cocoa was down $10, or 0.4pc, at $2,379 a tonne, having hit its lowest since early June at $2,374.

Speculators on ICE Futures US increased their net long position in cocoa in the week to July 23, making them net long cocoa for seven straight weeks.

Cocoa has been underpinned of late by the recently announced “living income differential” of $400 per tonne for Ivorian and Ghanaian beans, though market participants remain uncertain as to how exactly it will be implemented.

September London cocoa was down 3 pounds, or 0.2pc, at 1,822 pounds a tonne.

Copyright Reuters, 2019

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