LONDON: Raw sugar futures on ICE hit their highest in almost six years on Wednesday as continued signs of near-term supply tightness prompted speculators to buy and deterred physical traders from selling.
Sugar
March raw sugar rose 1.1% to $20.80 cents per lb by 1208 GMT after touching the highest level since February 2017 at 20.99 cents.
Dealers said speculative funds are increasing their long position while the trade is very cautious about selling, leaving little to stop the market from climbing.
Fundamentals are increasingly pointing to more production next year, they said, but the market does not seem to believe this will ease the near-term tightness.
This tightness can be seen in the premium for front-month March futures over May, which climbed to 1.42 cents per lb on Tuesday, having hit its highest in a decade last week.
Delays to harvests in Thailand, Australia and Central America have helped to tighten supplies while rain has meant some cane in Brazil will not be cut until next season.
In bearish news, dozens of merchant ships carrying grains and sugar are stuck outside Iranian ports as payments snags disrupt flows of goods into the country.
March white sugar rose 0.6% to $567.30 a tonne, having hit its highest since mid November at $574.
Raw sugar climbs as supplies tighten, arabica also up
Coffee
March arabica coffee rose 0.6% to $1.6855 per lb.
The strengthening of Brazil’s real currency against the dollar is underpinning arabica prices.
World coffee production is forecast to rebound in 2022/23, primarily because of a larger crop in Brazil, the U.S. Department of Agriculture said.
March robusta coffee rose 0.4% to $1,876 a tonne, having hit its lowest since Dec. 6 on Tuesday at $1,851.
Cocoa
March London cocoa rose 0.4% to 1,996 pounds a tonne after gaining 0.7% on Tuesday.
March New York cocoa fell 0.3% to $2491 a tonne, having closed flat on Tuesday.
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