LONDON/NEW YORK: ICE raw sugar futures extended declines for a second day on Wednesday from a four-month high reached on Monday, while dealers focused on a narrowing front-month spread before expiry of the spot contract later in the day.
Arabica coffee futures dipped in light volumes, with a focus on expectations of a big crop in Brazil, and cocoa eased as dealers digested the Liffe March options expiry at midday on Wednesday.
Raw sugar slipped as dealers monitored a shrinking front-month premium before the March contract expiry at settlement on Wednesday.
The March/May spread on ICE has narrowed from levels of over 1 cent last week to around 0.58 cent during Wednesday's trade, an indication that the amount to be delivered may fall well short of earlier expectations at the upper end of a 500,000 to 1 million tonne range.
"All eyes will be on the spread," said Pierre Sebag of London-based consultancy Sugar K.
ICE Futures US said the amount traded in the March contract on Tuesday stood at 13,037 lots. Traders said if the preceding three sessions are any indication, open interest in the March contract could again fall by 12,000 lots, which would cut the interest in the spot contract to around 16,000 lots or 812,000 tonnes.
"If we drop another 10,000 (lots) today, we could end up with a delivery of around 6,000 lots," one broker said. That would be equivalent to almost 305,000 tonnes of raw sugar.
The origins are still expected to be Thailand, Central American, Brazil and the Philippines.
Most brokers in the US predict deliveries will reach around 500,000 tonnes.
ICE March raw sugar futures traded at a 0.58 cent premium to May at 1322 GMT, down from 0.73 cents at the close on Monday.
March raw sugar futures on ICE were down 0.47 cent or 1.8 percent at 25.62 cents a lb, having touched a four-month high of 26.78 cents on Monday.
"It's expiry today, and we expect support in (ICE) March at 25 cents a lb to hold," said Thomas Kujawa of brokerage Sucden Financial.
London May white sugar futures eased $10.50 or 1.6 percent to $652.00 per tonne in light volume of 1,916 lots.
LONDON COCOA OPTIONS EXPIRY
London May cocoa was down 22 pounds or 1.5 percent to 1,499 pounds per tonne.
The London March cocoa options expiry at midday on Wednesday did not trigger heavy volumes, dealers said.
"I don't think much is actually taking place right around the options," one London-based dealer said.
ICE May cocoa was down $20 or 0.8 percent at $2,350 a tonne in slim turnover of 1,419 lots.
Cocoa farmgate prices in Ivory Coast's main growing regions rose last week as exporters competed for scarce supplies at the end of the main crop and international markets climbed, farmers and buyers said on Tuesday.
West Africa has entered a seasonal lull in cocoa exports between its main crop and mid crop.
Arabica coffee futures on ICE eased, with a focus on expectations of a big crop in Brazil.
"A very large crop is approaching in Brazil, which has pressured the market recently," said Stefan Uhlenbrock, analyst at F.O. Licht in Germany.
"It may not be as large as some expected initially after weather developments because the weather has not been exceptionally good to it."
Robusta coffee futures firmed, with dealers focused on slow exports from top producer Vietnam.
"The longer they (farmers) withhold it, the more selling pressure will be there later on in the year, and I think that will be felt in the markets some time in coming weeks," Uhlenbrock said.
Benchmark Liffe May futures were $8 or 0.4 percent lower at $2,016 a tonne.
Comments
Comments are closed for this article.