Raw sugar futures on ICE slipped on Monday on technical weakness following an earlier rally, while cocoa gained on short-covering, dealers said. March raw sugar settled down 0.07 cent, or 0.5 percent, at 13.82 cents per lb. The market has been in technically overbought territory on the relative strength index for over two weeks, prompting Monday's slight correction, dealers said.
Prices rose to as high as 13.95 cents earlier in the session, equaling last week's eight-month high. The market was encountering technical resistance at 14 cents, James Liddiard, a senior vice president at consultancy Agrilion, said in a market note.
Still, the market was underpinned by expectations of lower supply. Datagro said it sees the global 2018-19 sugar balance shifting from surplus to a 710,000-tonne deficit. Speculators halved their bearish stance in raw sugar to just 48,046 lots on ICE Futures US in the week to Oct. 16, US Commodity Futures Trading Commission (CFTC) data showed on Friday.
"You can't fight the trend right now in sugar ... I'm not long, so I'm standing on the sidelines," one US trader said. December white sugar settled down $2, or 0.5 percent, at $377 per tonne. December New York cocoa settled up $58, or 2.7 percent, at $2,220 per tonne.
The rally was driven by short-covering, dealers said, especially as CFTC data showed that the speculative short position was at its largest in over a year, dealers said. Cocoa's rally lost steam at $2,226, after encountering technical resistance at $2,230, said Boyd Cruel, senior market strategist at High Ridge Futures.
Above-average rainfall in top cocoa grower Ivory Coast's eastern growing regions last week could hinder bean drying and fuel the spread of disease, farmers said. The overall production outlook still appeared favorable, however, with Ivorian cocoa port arrivals from Oct. 1-21 up 46 percent year-on-year. December London cocoa settled up 35 pounds, or 2.2 percent, at 1,641 pounds per tonne.
December arabica coffee settled down 4.45 cents, or 3.6 percent, at $1.1765 per lb. On Friday, prices had touched an 8-1/2-month high of $1.2550.
This was the contract's biggest daily percentage drop in over two months. Coffee had been in technically overbought territory for several sessions, prompting a correction, dealers said.
Total open interest fell for the 16th straight session to 287,732 lots, the lowest since early July, ICE data show. January robusta coffee settled down $18, or 1 percent, at $1,721 per tonne.
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