LONDON: Raw sugar futures on ICE hit a one-month low on Thursday as the dollar rebounded and oil prices fell, while New York cocoa hit a six-month peak as funds scoured commodity markets for bargains.
A strong dollar makes dollar-priced sugar costlier for holders of other currencies, while falling energy prices tempt cane mills in Brazil to ramp up sugar output in place of cane-based ethanol fuel.
October raw sugar was down 0.4 cents, or 3%, at 12.07 cents per lb?? by 1425 GMT, having hit a one-month low of 12.05. Dealers said there appears to be limited physical demand for raws, hence the discount for October futures versus March. They added further losses were likely if the dollar continues to improve.
Still, a price collapse seems unlikely, they said, as consumers have more buying to do. The United Nation's Food and Agriculture Organisation's sugar price index rose 6.7% in August from July amid unfavourable weather in the European Union and Thailand and strong import demand from China.
October white sugar fell $6.20, or 1.7%, to $352.90 a tonne. December London cocoa rose 1 pound, or 0.1%, to 1,810 pounds per tonne?, having hit a three-month peak of 1,832 pounds. December New York cocoa fell $22, or 0.9%, to $2,658 per tonne, having hit a six-month peak of $2,708.
Cocoa is benefiting from widespread fund buying of commodities, dealers said. December arabica coffee fell 0.9 cents, or 0.7%, to $1.3035 per lb, having hit an eight-month high of $1.3270 on Tuesday. Arabica remains underpinned by ongoing falls in exchange stocks, which are at 20-year lows, dealers say.
Costa Coffee, a unit of Coca-Cola Co, could cut up to 1,650 jobs in a bid to deal with the hit to its UK stores from the Covid-19 crisis. November robusta coffee fell $3, or 0.2%, to $1,437 a tonne. Domestic coffee prices in Vietnam, the world's top robusta producer, edged down on Thursday, though traders said a dearth of supply should limit falls going forward.
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