NEW YORK/LONDON: Soft commodity markets on ICE rallied on broad-based buying and the weak US dollar on Monday, with raw sugar futures extending the prior session's sharp gains to reach a four-year high as global supplies tightened.
March raw sugar settled up 0.28 cent, or 1.3 percent, at 22.75 cents per lb after rising to 22.95 cents, the highest for the second month since August 2012.
The contract rose as much as 8 percent on Friday, when total open interest soared by nearly 22,000 lots to 907,581 lots, exchange data showed. Dealers said the net long position held by speculators may now be above the record set in June.
"They've got a huge long position now and somehow they have got to keep it up," one London dealer said, noting the rally might have been overdone.
Dealers said short-term supplies appeared ample, reflected in October's discount to March, although the March/May spread's premium rose in the past two sessions, bolstered by widely forecast global deficits for both the 2015-16 and 2016-17 seasons.
Nick Gentile, managing partner of commodity trading advisor NickJen Capital, said that margin calls following Friday's rally spurred many commercial traders to get out of their short positions, further supporting prices.
Commodities group RCMA confirmed on Monday that it was one of the receivers in the first expiry of the containerized white sugar contract on Friday.
ICE Futures Europe introduced the container contract to address a need for smaller quantities of sugar that can be delivered on container ships alongside other goods.
"As with any nascent contract, aside from the value of the positions delivered/received, we believe it is key to have the participants carry the position to expiry for them to test the mechanisms of the container physical delivery in containers," RCMA Group sugar trader Alban Bailbled said.
December white sugar futures settled up $4, or 0.7 percent, at $587.40 per tonne.
Coffee prices were also higher with December arabica settling up 4.4 cent, or 3 percent, at $1.528 per lb and November robusta ending up $23, or 1.2 percent, at $1,960 per tonne.
"The weaker dollar is definitely some sort of catalyst in the rally," Gentile said.
Cocoa futures also jumped with London December closing up 52 pounds, or 2.3 percent, at 2,298 pounds per tonne and New York December settled up $69, or 2.5 percent, at $2,872 per tonne.
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