Raw sugar hits one-week high but excess supply caps gains

• Sugar has been underpinned by a further rise in the already large speculative net short position and expectations the global market will swing into deficit in the 2019/20 season.
• Arabica coffee drifted lower and cocoa steadied following its recent strong run.

LONDON: Raw sugar futures hit a one-week high on Tuesday as funds covered their record net short position, though signs of excess nearby supply continued to cap gains.

Arabica coffee drifted lower and cocoa steadied following its recent strong run.

SUGAR

October raw sugar was up 0.11 cent, or 1pc, at 11.33 cents per lb by 1059 GMT, having hit its highest since Sept. 16 at 11.34 cent per lb.

Sugar has been underpinned by a further rise in the already large speculative net short position and expectations the global market will swing into deficit in the 2019/20 season.

However, dealers expect a large amount of raw sugar will be delivered against the October contract, which expires on Monday, indicating excess nearby supply.

"Although much can happen before expiry currently the open interest is 10,000 higher than in 2013 when 1.5 million tonnes were delivered," said a dealer.

December white sugar was up $1.90, or 0.6pc, at $331.10 per tonne, having hit its highest since June 28 at 331.80.

COFFEE

December arabica rose 0.15 cent, or 0.15pc, to 99.15 per lb. The contract dipped on Friday to a low of 98.05 cents, its weakest since Sept. 10.

"With our forecasts for continued weakness in the Brazilian real, only limited disruption so far to the Brazilian crop, and technical indicators suggesting room for additional downward momentum, coffee prices will continue to struggle," said Fitch in a note.

"Speculative sentiment remains at low, but not extreme levels, meaning prices have the potential to head even lower," it added.

November robusta coffee was up $1, or 0.1pc, at $1,317 a tonne.

COCOA

December New York cocoa was down $3, or 0.1pc, at $2,451 a tonne. The contract rose on Friday to a peak of $2,484, its highest since July 26.

Cocoa has rebounded strongly after hitting a 2019-low of $2,165 in August but the scope for further gains is limited as the supply outlook improves.

Cocoa harvesting has picked up in Ivory Coast as rains continue ahead of the October-to-March main crop, with trees growing well, farmers said.

Cocoa arrivals at ports in top grower Ivory Coast reached 2.164 million tonnes from Oct. 1 last year to Sept. 22, exporters estimated, up about 10.7pc from the prior year period.

December London cocoa fell 11 pounds, or 0.6pc, to 1,841 pounds a tonne, having hit its highest since early August  at 1,858 pounds on Monday.