Liffe sugar higher

Liffe March white sugar ended $6.00 higher at $780.20 per tonne on Tuesday. Market remains choppy with prices moving back up to around the middle of their recent trading range. Physical offtake remains slow and further clarity on the outlook for Indian exports awaited.
Liffe May cocoa closes 1 pound higher at 2,000 pounds a tonne. Market underpinned by uncertainty about the impact of EU sanctions against top grower Ivory Coast but the strength of sterling against the dollar capped gains. Liffe March robusta coffee ended up $7 at $2,147 a tonne. Market supported by the large discount of robusta to arabica coffee, which has increased the incentive for roasters to include more robustas in mass-market blends.
Stefan Uhlenbrock, senior commodity analyst at Germany-based F.O. Licht, said the uptrend was likely to continue. "From a general perspective, I would see every chance that last week's highs on coffee can be eclipsed," he said. "The market will remain very tight because of Brazil's off-year and Colombia."
Colombia, the top producer of high-quality washed arabica, went into its third straight year of significantly lower production, while top grower Brazil is entering an off-year in its biennial crop cycle. Market participants said coffee roasters may seek to substitute cheaper robusta for arabica in their coffee blends as the arabica premium rises, supporting robusta prices.
Liffe robusta coffee futures rose $21 or 1.1 percent to $2,163 per tonne after hitting $2,185 last week, the highest level for the benchmark second month since September 2008. Uhlenbrock, at F.O Licht, said German roasters were already adding robusta to their mass-market coffee blends.
"Quality is going down is what I'm hearing from industry circles," he said. "From this perspective, I would say the potential for substitution is not yet maxed out." Soft commodity markets were also supported by signs of robust growth in Germany, helping to boost equity markets to a fresh 28-month high. Romain Lathiere, fund manager at Swiss-based Diapason Commodities Management, said strong European economic performance often underpins higher commodity prices, as Europe is a key global consumer of goods from commodities-driven economies in Asia and Latin America.
Higher growth in Asia and the use of commodities as an inflation hedge have also boosted markets, with many traders going long on commodities, sparking an uptrend since last June. But Lathiere said the trend could be nearing its end. "Markets can't climb like this for months; we're expecting a retracement," he said. "They need to take a breather and retreat before bouncing back."
"(The sanctions) have lent a supportive hand to commodity prices," a London-based trader said. "But it's a bit of a knee-jerk reaction. You'll find one way or another, cocoa will get out. ... "Ultimately the Ivorians need their exports, and every consuming nation needs their cocoa."
Sugar prices also rose as a lack of new information about exports from top producer India kept physical dealers out of the market, with price speculators dominating daily trading, a London-based trader said. "No one's looking to jump in (to the market) unless there's more certainty from a fundamental perspective," the trader said. "What's happening now doesn't really represent the sugar market. It just represents a bit of a casino." India has said it could delay shipment of 500,000 tonnes of sugar because of concerns about domestic food inflation, and market participants said sugar was likely to stay bullish until India's crop outlook was more certain.