Sugar and cocoa rise on weak dollar, coffee mixed

NEW YORK/LONDON: Raw sugar and cocoa futures shot higher on Thursday in reaction to a weaker dollar, while coffee values were mixed in dealings dominated by switch and spread trading.

Sugar bucked what would be bearish numbers from sugar industry group Unica in Brazil, which forecast 2012/13 center-south sugar output would exceed the previous year's level.

New York's May raw sugar contract increased 0.27 cent to close at 24.22 cents per lb. London's May white sugar futures rose $3.40 to settle at $632.20 per tonne.

"I think sugar and cocoa is purely a dollar play," said Jack Scoville, senior analyst at The Price Group in Chicago.

He noted that most of the running was also in switch and spread trade, with very little outright business done for now.

Unica said the center-south cane crop will yield 33.1 million tonnes of sugar in 2012/13, up from 31.3 million last year as investment in plantings and better weather help the crop turn the corner after its first decline in more than a decade last year.

Unica pegged the 2012/13 cane crush at 509 million tonnes, which is inside the range of current industry estimates.

Analysts from Itau BBa in Brazil forecast the crush at 515 million tonnes.

Scoville said the figures "would have been negative" but it did not faze the market.

"The fact that the sugar estimate is over 33 million tonnes is fairly neutral" for the market, a London-based broker said.       "It's bigger than some people were saying."

"We believe that the current market consensus is that center-south Brazil cane output in 2012/13 will be around 500 million to 520 million tonnes," said Peter De Klerk, senior analyst with London-based commodities house Czarnikow.

COCOA UP AS EYES ON GRIND, COFFEE MIXED

Cocoa futures climbed ahead of the expected release of European first-quarter grind data, a measure of demand, on Friday. North American grind data is due out April 19.

For Europe, where 40 percent of the world's cocoa is consumed, forecasts from analysts contacted by Reuters ranged from a drop of 3.8 percent to a rise of 3 percent from the first quarter last year, when 353,103 tonnes of beans were processed.

July cocoa on ICE climbed $57 or 2.7 percent to close at $2,160 per tonne. On Wednesday, the contract had dropped to $2,056, the lowest level for the second month since Jan. 6.

London July cocoa rose 28 pounds or 2.01 percent to finish at 1,418 pounds per tonne.

US cocoa futures action was dominated by May/July spreading, which inverted for the first time since June 2011, ahead of first notice day for the May contract on April 17.

"Right now, most people are spreading. We're seeing everything move into the July contract in big form," said Hector Galvan, senior market strategist for brokerage RJO Futures.

Galvan said it doesn't look like the inversion is due to any short-term supply issues at this point.

Robusta coffee trickled lower, while US arabicas finished higher. The latter, however, remained toward the bottom of its range.

Arabica coffee futures failed to garner any of the commodity complex's upward momentum and inched lower, remaining well-established in the range of $1.77-$1.95 that it has held for the past month.

"It's the overall pressure from South America," Galvan said, referring to the large crop on the trees in Brazil.

Liffe July robusta coffee futures slid $137 to close at $1,996 per tonne. July arabica coffee on ICE added 1.60 cents to end at $1.8425 per lb.