Raw sugar rallies, coffee turns lower

ICE raw sugar futures climbed on Friday in fairly thin volume, boosted by speculative and fund buying, while arabica coffee tumbled in a flurry of late-day selling unmatched by roaster buying.
Cocoa settled lower Although raw sugar rallied, the market wound up pretty much where it ended last week as the key March contract traded in a band running from 23.50 cents to 26.50 cents per lb. Consumer interest also helped lift sugar. Brokers fielded inquiries from possible customers who feel sugar has gone down enough to book orders for some forward coverage. March raw sugar on ICE jumped 0.52 cent, or 2.1 percent, to settle at 25.16 cents a lb.
"It's spec (speculative) and algo-style (algorithmic) buying. There's no fresh news driving the market," a London-based sugar futures dealer said. "Volumes are quite low, so someone can come in and push prices easily." Sugar prices have been sliding in recent weeks as the market's focus turns increasingly to anticipated large crops in the northern hemisphere. The March contract has fallen about 17 percent after rising to a peak of 30.60 cents in August.
"The sugar markets have been able to glean support from the rising commodity complex in the past week, but with speculators selling and more sugar expected to arrive on the market in the coming months, we expect further downside," Rabobank said in a market update on Friday. December white sugar futures on Liffe closed up $12, or 1.9 percent, at $653.70 a tonne.
The market extended its losses late in the session on a wave of long liquidation by funds and the trade. The December contract fell on a lack of roaster buying, triggering automatic sell orders below $2.2675 per lb, dealers said. December arabica coffee futures on ICE reversed early gains and tumbled 10.05 cents, or 4.3 percent, to finish at $2.2435 per lb. The contract was on track for a flat weekly move. January robusta coffee on Liffe also erased early gains and finished down $68, or 3.3 percent, at $1,983 per tonne.
ICE December cocoa inched down $8 to settle at $2,652 a tonne, ending the week up 1.7 percent. Cocoa output in Indonesia, the world's third-largest producer, is seen down about 25 percent this year due to wet weather and disease and will improve in 2012 to a level below initial estimates, the Indonesian Cocoa Association (Askindo) said on Friday. Liffe March cocoa finished down 17 pounds at 1,746 pounds per tonne as the sterling advanced against the dollar.