NEW YORK/LONDON: Raw sugar futures on ICE surged higher after tapping a six-week trough on Wednesday, breaking a six-day losing streak after the market found support at the 100-day moving average.
Arabica coffee also turned higher, hovering below last week's 2012 high after open interest rose for the 18th straight session to reach a record.
March raw sugar settled up 0.51 cent, or 2.41 percent, at 21.7 cents per lb, after dipping to 21.08 cents, the weakest level for the contract since Sept. 15.
"I think in the last few days we've had spec and fund long liquidation but we've encountered here some technical support," one London dealer said.
The contract bounced after reaching the 100-day moving average, a key support level just above the psychological 21-cent level.
"It would not be a surprise to see some value buying appearing and prompting a correction off the recent significant sell off," said Agrilion Commodity Advisors in a note. "However, on the flip side, further sell stops and technical selling is likely to be unearthed should the 21-cent support give way."
Dealers said fund selling during the recent decline had only put a modest dent in the speculators' large position and they remain heavily net long. December white sugar settled up $6.80, or 1.2 percent, at $574 per tonne.
In coffee, traders noted the soaring total open interest in arabica futures rising to a record 217,273 lots after speculators lifted their net long position to an 8-1/2-year high, exchange data showed. December arabica settled up 1.45 cent, or 0.9 percent, at $1.629 per lb, while robusta coffee, which has seen a drop in total open interest, firmed slightly with January ending up $6, or 0.3 percent, at $2,164 per tonne. Cocoa futures were mixed. March New York cocoa settled up $5, or 0.2 percent, at $2,632 per tonne, while March London cocoa settled down 3 pounds, or 0.1 percent, at 2,169 pounds per tonne.
"The deficit was relatively small last year and for this year the surplus also still looks relatively small," Victor Balli, chief financial officer for chocolate maker Barry Callebaut, told Reuters. "Obviously, we do not know if the chocolate market will recover, which would fuel demand.
The other question is whether the main crop in West Africa will be as good as it appears to be at this stage," he said in an interview after the company reported a fall in full-year net profit.
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