Arabica coffee futures on ICE rose on Tuesday, extending their recent run-up, while fund short-covering helped raw sugar to a one-month high. March arabica coffee rose 2.3 cents, or 1.8 percent, to $1.2850 per lb by 1456 GMT, with the market on track for a fifth consecutive daily gain.
Dealers said the market's recent improved performance had created a more constructive outlook on price charts. "This suggests a major low has been made and we can now see an extended and sustainable bull move in the first half of 2018," Shawn Hackett, president of Hackett Financial Advisors, said in a market note.
Hackett also said that crop tours in top grower Brazil in the coming days should show that production is likely to be below the expected 60 million bags after adverse weather between mid-August and the end of October. "We think the crop prospects are going to be shaved significantly from the 2018 crop, setting off a fire storm of panic buyers worried about a shortage of coffee," he said.
March robusta coffee rose $17, or 1 percent, to $1,735 a tonne. March raw sugar was up 0.02 cents, or 0.1 percent, at 15.18 cents per lb after climbing to a one-month high of 15.19 cents.
Dealers said the recent run-up in prices had been driven largely by fund short-covering while the scope for further gains could be capped by the prospect of a global surplus in the current 2017/18 season. Speculators cut their net short position in raw sugar contracts on ICE Futures US in the week to Dec. 26, US government data showed on Friday.
The prospect of buying linked to index fund rebalancing after sugar's poor performance in 2017 continued to support the market. "The market is rife with rumours of imminent index fund buying to rebalance portfolios," said Thomas Kujawa, co-head of the softs department at Sucden Financial.
March white sugar gained $0.30, or 0.1 percent, to $395 a tonne. March London cocoa was down 7 pounds, or 0.5 percent, at 1,371 pounds a tonne.
Dealers said prices in London were weighed partly by a strong pound, with the UK currency rising to a three-month high against the dollar on Tuesday. March New York cocoa rose $14, or 0.7 percent, to $1,906 a tonne.
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