NEW YORK/LONDON: Raw sugar futures closed lower on Wednesday with the market sliding back towards a six-month low set early last week, weighed by an improving supply outlook.
Trade sources cited stronger-than-expected sugar production in top grower Brazil and No. 2 exporter Thailand as well as the prospect of further unrestricted exports from India.
Arabica coffee futures reversed to close up a shade in choppy and light dealings, remaining close to a 34-year top set a week ago. Cocoa jumped as the pound rallied and players awaited developments on further shipments and the mid-crop in top grower Ivory Coast.
May raws on ICE fell 0.39 cent or 1.6 percent to close at 24.55 cents a lb, just up from its six-month low of 24.00 cents hit early last week. July dropped 0.28 cent to end at 22.96 cents.
A sharp rise in output in Thailand had weighed on cash premiums and could lead to the delivery of Thai raws against the May raw sugar contract on ICE which expires Friday, dealers said.
Open interest in the May contract was above 50,000 lots by April 26. Uncertainty about the quality of Thai raws could weigh on nearby premiums, dealers said.
"With the open interest where it is right now it looks like someone's going to stop New York," said Nick Gentile, head of trading at Atlantic Capital Advisors in New Jersey.
"I'm assuming they have a home for it if they're willing to take it out of the market place, just in case there could be some sort of weather event or if we have another backlog of ships in Brazil," he added.
Raw sugar prices have now fallen by nearly a third after setting a 30-year high of 36.08 cents on February 2.
London August white sugar futures dropped $6.60 to settle at $626.50 per tonne.
CHOPPY COFFEE
Arabica coffee turned higher on the heels of the commodity complex after the Federal Reserve said it will keep the US interest rate at exceptionally low levels. Tight supplies of high quality beans remained a background supportive factor.
Dealers said fund and investors were increasingly dominating the market with trade participation on the wane, while roasters were waiting around $2.80.
ICE July arabica coffee erased early losses to close up 0.10 cent at $2.9640 per lb, still within striking distance of the 34-year high of $3.0250 touched on April 20.
Robusta coffee futures on Liffe were higher, hitting a contract high for the second straight day, and finally gaining some ground on the arabica market following a prolonged decline in its relative value. July robusta coffee futures rose $34 to finish at $2,536 a tonne after earlier hitting $2,555, the highest level for the second month since the end of March.
Cocoa futures on ICE climbed on the strong sterling against the US dollar, and jumped $92 within a minute, taking it through the 23.6 percent Fibonacci retracement level. July gained $75 or 2.4 percent to finish at $3,168 a tonne.
Prices on Liffe reversed with July finished up 20 pounds at 1,927 pounds a tonne.
"Political instabilities in (top grower) Ivory Coast will remain an upside risk in the near term," Barclays Capital said in a report.
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