LONDON: Raw sugar futures turned higher on Friday after earlier dipping to a two-month low as technical indicators suggested the market was oversold following this week's decline.
March raw sugar was up 0.21 cents, or 1 percent, at 20.43 cents per lb at 1251 GMT after earlier dipping to a low of 20.08 cents, the weakest for the front month since Sept. 15.
Dealers said buying emerged just above the major support at 20 cents a lb on the March contract and a breach of that level could trigger another wave of fund long liquidation. "We expect a more thorough test of 20 cents in due course," said Sucden Financial senior trader Nick Penney. March white sugar rose $3.80, or 0.7 percent, at $541.70 per tonne.
The decline has been triggered partly by sentiment that an expected global shortfall in the 2016/17 season may be lower than previously expected, a view reinforced by a report issued by the US Department of Agriculture on Thursday.
Robusta coffee futures were lower as favourable weather boosted harvest progress in top producer Vietnam. Sunny days this week have been supporting harvesting in the Central Highlands coffee belt of Vietnam. January robusta fell $19, or 0.9 percent, to $2,144 a tonne.
Dealers said the market remained underpinned by tight supplies after poor robusta harvests in Brazil and Indonesia and the prospect of a smaller crop in Vietnam. Production in Indonesia was curbed by dry weather in late 2015 but conditions for the next crop have been much wetter.
"While this will provide relief from the excessive dryness of the 2015 El Nino event, it is not yet clear to what extent this will improve Indonesia's prospects for coffee production," a report produced by the USDA's attache in Indonesia said.
"Growers note that although the rain is providing a welcome relief, its frequency and duration, as well as its interference with pollination will determine yields in the coming year."
March arabica was off 0.95 cent or 0.6 percent at $1.6200 per lb. Cocoa prices stabilised after New York futures had slid to the lowest level in more than three years on Thursday, weighed by an improving crop outlook in West Africa which reinforced expectations there would be a global surplus in 2016/17.
March New York cocoa was off a marginal $1, or 0.04 percent, at $2,418 a tonne after setting a low of $2,358 on Thursday, the weakest for the second position since August 2013.
March London cocoa was unchanged at 2,001 pounds a tonne.
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