Sugar firm, eyes on Brazil crop, coffee falls

LONDON: Sugar futures edged higher on Wednesday, supported by a fall in Brazilian production, while coffee futures slipped, as fears of a US debt default weighed on markets.

ICE Cocoa was also lower as West African ample supplies dragged on prices.

SUGAR

ICE raw sugar futures were slightly higher, remaining below October's contract high of 31.68 cents a lb hit the previous session, underpinned by uncertainty over top producer Brazil's crop size.

October raw sugar on ICE was up 0.06 cents or 0.2 percent at 31.00 cents a lb at 0829 GMT.

Dealers said high prices were curbing physical demand as buyers hoped for the market to correct lower.

October white sugar on Liffe rose $1.00 or 0.1 percent to $806.40 per tonne after touching a contract high of $821.00 on Monday.

Crushing of cane in Brazil and production of sugar and ethanol made from it are catching up with the 2010 season, data from cane industry association Unica showed on Tuesday, but the crop may soon run out of puff.

New York October sugar is expected to rise to $32.60 cents per lb, as an upward wave (5) is progressing, according to Reuters analyst Wang Tao.

COFFEE

Arabica coffee futures on ICE were slightly lower, as market technicals indicated potential for further weakness.

New York coffee has completed a weak wave (4) rebound, and would fall to $2.4220 per lb, Reuters analyst Wang Tao said.

September arabica coffee on ICE fell 1.8 cent or 0.7 percent to $2.4315 per lb. The contract dipped to $2.38 on Thursday, its lowest level since January.

September robusta coffee on Liffe traded down $26 or 1.2 percent to $2,147 per tonne.

Indonesia's coffee beans were offered at record premiums of $400 a tonne above London futures, highlighting worsening supply scarcity in the world's second-largest robusta producer after Vietnam, dealers said on Wednesday.

COCOA

Cocoa futures on ICE were slightly lower, under pressure from a growing 2010/11 world surplus.

Dealers said the market was underpinned by good industry off take at these levels.

September cocoa on ICE fell $18 or 0.6 percent to $2,997 a tonne

New York cocoa is expected to revisit the July 25 low of $2,998 per tonne, to complete a wave "c", Reuters analyst Wang Tao.

MARKET NEWS

Gold soared to a record high for the sixth time in two weeks on Wednesday and the dollar collapsed to another record low against the Swiss franc as investors sought safety from a possible US debt default.

Oil fell on Wednesday as bitterly partisan wrangling over the US debt limit unnerved investors and sent them fleeing from assets perceived to be dependent on growth.

The dollar sank to a three-month low against a basket of major currencies on Wednesday as markets fretted about the prospect of a US debt default and downgrade, while they cautiously waited to see if Japan would intervene to weaken the yen.

Copyright Reuters, 2011