LONDON: Raw sugar futures rose on Wednesday in a technical correction after the previous day's sharp slump while arabica coffee slid further as speculative selling persisted.
SUGAR
October raw sugar was up 0.14 cents, or 1 percent, at 13.90 cents per lb by 1334 GMT, having earlier hit a session high of 14.05 cents.
Prices plunged 3.8 percent on Tuesday on forecasts for earlier than expected rains in Brazil, which would benefit the cane crop after a recent dry spell.
Dealers pointed to light short-covering on Wednesday as the drop in prices below ethanol parity levels in Brazil prompted sellers to back off.
The dollar, which softened ahead of a Federal Reserve meeting, also offered support.
Millers in India's Maharashtra state will start crushing sugarcane from Nov. 1 as heavy rain over the last few days has made it difficult to bring operations forward as hoped, two government officials said on Wednesday.
December white sugar rose $4.90, or 1.3 percent, to $369.90 a tonne, also recovering from a sharp slump on Tuesday.
White sugar futures have been under pressure as the European Union inches closer to liberalising its sugar quotas on Oct. 1 and boosting production sharply.
"The market is going to have to learn how to deal with the return of EU sugar," said Tobin Gorey of the Commonwealth Bank of Australia. "And we suspect it will be the hard way."
COFFEE
December arabica coffee was down 1.40 cents, or 1 percent, at $1.375 per lb, after touching a low of $1.365.
This extended losses from the prior session, when prices shed 3.6 percent.
Futures rallied to a five-week high earlier this week on expectations that drought in Brazil would dent prospects for a large crop.
"The weakness is partly to do with the better outlook for October in terms of rainfall," said one dealer. "But I think the market is just getting smacked around a bit here. There are some quite sizeable (speculative) positions in the market."
November robusta coffee rose $22, or 1.1 percent, at $2,005 a tonne.
Dealers said the climb above key resistance levels was supportive for prices, though volumes remained thin.
COCOA
December London cocoa rose 3 pounds, or 0.2 percent, to 1,471 pounds a tonne.
December New York cocoa gained $14, or 0.7 percent, to $1,979 a tonne.
Ghana's cocoa industry regulator Cocobod signed a $1.3 billion loan with international banks on Wednesday to finance purchases for the 2017-18 season, which is due to open early next month.
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