Raw sugar hits 2-1/2-month high, white sugar signals supply tightness

NEW YORK/LONDON: Raw sugar futures on ICE closed up in a new 2-1/2-month peak on Friday, heading for gains of around 10% this week as improved macro-economic signals and tightness in white sugar supply continued to draw funds in on the buy side.

White sugar prices hit three month highs, with the front month trading more than $20 per tonne higher than the second month, an inverted market structure that signals tight supply, strong demand, or both.

SUGAR

July raw sugar settled up 0.29 cents, or 2.5%, at 12.02 cents per lb, near the intra-day peak of 12.03 cents.

Oil prices rallied, deterring Brazilian cane mills from ramping up sugar output at the expense of cane-based ethanol fuel, while world stocks held near three-month highs on Europe's stimulus boost.

Dealers cited fund buying amid improved macro and technical signals, but said fundamentals likely don't justify prices much above 12 cents as Brazil remains on course to produce maximum sugar, while India's output is set to recover.

"Improved macroeconomics (Brazilian real, oil) and an array of bullish technical signals have triggered speculative buying in New York #11 futures," said S&P Global Platts Analytics.

August white sugar settled up $8.10, or 2.1%, at $392.90 a tonne.

COFFEE

July arabica coffee settled up 0.75 cents, or 0.8%, at 98.9 cents per lb.

The Brazilian real rose, deterring producer selling by lowering the value of dollar-priced coffee in local currency terms.

Brazil's harvest is a little behind the average for this time of the year, but not by much, leaving arabica under pressure overall with the market on course to record a surplus this season.

September robusta coffee settled up $35, or 2.9%, at $1,245 a tonne, a 2-1/2 peak.

COCOA

September New York cocoa settled up $7, or 0.3%, to $2,384 a tonne.

July London cocoa settled down 28 pounds, or 1.5%, to 1,867 pounds per tonne.