Raw sugar futures on ICE fell to a 6-1/2-year low for the second straight day on Tuesday, pressured by abundant supplies and chart-based sell signals, while cocoa extended gains to an 8-1/2 month high on momentum buying. Robusta coffee climbed, with the focus on the July/September spread, which rallied to the steepest premium in more than a year. Arabica rose but remained well within the range it has held for more than three months.
Raw sugar prices extended last week's losses on heavy stocks, favourable cane harvest weather in top producer Brazil, higher-than-expected output in India and Thailand, and fund selling. "There are not enough people picking up sugar while there is a spot surplus," said Agrilion consultant Michael Liddiard. "There is no worthwhile fresh fundamental reason to give the market short-term reason to rally."
Commodities house Czarnikow released a report forecasting a global sugar deficit of 1.7 million tonnes in 2015/16 after several years of surpluses, broadly in line with forecasts by the International Sugar Organisation and analyst Green Pool. July raw sugar on ICE settled down 0.15 cent, or 1.3 percent, at 11.31 cents a lb, just above the session low of 11.30 cents, the spot month's lowest level since December 2008. August white sugar ended down 80 cents, or 0.2 percent, at $344.20 a tonne, after touching a contract low of $344. Cocoa futures kept rising on crop concerns in West Africa, producer of roughly 70 percent of the world's beans, while momentum traders reacted to buy signals as the markets rose for the third straight session, traders said.
New York September cocoa closed up $37, or 1.2 percent, at $3,235 a tonne, just below the session peak of $3,241. July London cocoa finished up 10 pounds, or 0.5 percent, at 2,147 pounds a tonne. Both contracts rose to their highest since late September 2014. The spot robusta coffee contract extended its premium to September futures after shifting to contango on Monday, in what traders said appeared to be a combination of short-covering and fresh buying.
September robusta settled up $20, or 1.2 percent, at $1,754 a tonne. The July/September spread extended its rally to a premium as high as $43 ahead of July options expiry on Wednesday and July futures' first notice day on July 1. Arabica coffee futures also rose, with September ending up 1.7 cents, or 1.3 percent, at $1.32 per lb.
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