Raw sugar surges

ICE raw sugar futures rallied more than 3 percent on Friday, extending gains on chart-based buying after rebounding from a four-month low earlier in the week, and lifting the spot spread's premium further above a September low. Cocoa futures also rose, with dealers focused on prospects for West African mid-crops, while coffee prices dropped as the firm US dollar provided some pressure.
Raw sugar futures surged from oversold positions in volume that was more than double the average. "Technical selling has dried up," one broker said, referring to a slide to a four-month low on Tuesday. "Perhaps the trade is reloading." ICE March raw sugar settled up 0.38 cent, or 3 percent, at 13.27 cents per lb, after surging 3.6 percent to 13.35 cents. It finished the week higher for the first time in three weeks.
Total open interest fell Monday through Thursday, exchange data showed, as the market fell to and then bounced above its four-month low. "The trade chatter seems to be focused on the recently low levels (prices) lifting destination demand interest, and keen eyes on shipping line-ups in Brazil suggest demand is buoyant," said Tom Kujawa, co-head of softs at Sucden Financial Sugar.
The March/May raw sugar spread, often a reflection of physical demand, had a volatile week marked by both contango and backwardation chart formations. The spot contract fell to a discount of 0.1 cent per lb, the lowest in nearly five months, only to surge to a premium of 0.15 cent on Friday. May white sugar settled up $5.50, or 1.5 percent, at $385.50 per tonne. March London cocoa settled up 21 pounds, or 1.1 percent, at 1,990 pounds per tonne, while May New York cocoa settled up $10, or 0.4 percent, at $2,781 per tonne, with the most severe Harmattan winds in decades expected to curb production in West Africa.
In coffee, arabicas eased on pressure from the weaker Brazilian real against the dollar, while a drawdown of certified exchange stocks underpinned prices, traders said. Arabica stocks in ICE-certified warehouses fell to their lowest since mid-2012, and traders spoke of expectations that the pace of drawdowns of certified stocks from warehouses would quicken in 2016. ICE March arabica coffee settled down 2.8 cent, or 2.3 percent, at $1.204 per lb. March robusta coffee settled down $8, or 0.6 percent, at $1,427 per tonne.