Sugar rise stalls

Raw sugar futures slid Wednesday as investors took profits after prices reached a three-week top, while London robusta values recovered from a two-month low as the softs complex put in a mixed performance ahead of the New Year holiday. "We don't anticipate much action between now and the New Year holiday, but given the low liquidity, it is possible volatility may increase as size players can 'bully' markets under these conditions," said Nick Penney of brokerage Sucden Financial.
Country Hedging Inc analyst Sterling Smith added: "It's the silly week. We see a little bit of shorts driving (markets) up. And then they (liquidate) and go home." Raw sugar saw early follow-through buying lift it to three-week highs, but that dried up when the dollar firmed and the modest pace of buying prompted many speculators to sell.
The volume of business in US soft commodity markets picked up as it ranged from 5 to almost 50 percent below the 30-day norm, Thomson Reuters data reported. On Tuesday, trades were running at 70 to 83 percent below the 30-day average. ICE March raw sugar futures in New York fell 0.48 cent to close at 23.13 cents a lb, having hit a three-week high of 24 cents. London's March white sugar futures lost $12.10 or almost 2 percent to end at $599.10 a tonne.
Raw sugar has fallen sharply since reaching a 30-year peak around 36 cents a lb earlier this year. It is now on track to be one of the five weakest commodity markets in 2011. Arabica coffee futures jumped to a three-week high on fund short-covering after the benchmark March hit $2.255 per lb. "Coffee is up almost exclusively on short covering. Technical aspects of the market were positive," said one veteran coffee dealer in New York.
ICE May arabica futures were up 3.90 cents or 1.75 percent to close at $2.2675 per lb. London's March robusta coffee futures traded down to a two-month low, basis the second month, and a contract low of $1,792 a tonne due to hedging by top robusta producer Vietnam. The contract ended down $13 at $1,838 a tonne. The spot arabica contract is on track to close the year down roughly 7 percent, versus a 77 percent rise in 2010.
Cocoa futures fell, with US beans tumbling nearly 4 percent in thin dealings, pressured by the sharply falling sterling against the US dollar. New York's March cocoa contract dropped $83 or almost 4 percent to finish at $2,133 a tonne. London's March cocoa contract lost 17 to close at 1,390 pounds a tonne.