Sugar, cocoa prices swept higher as commodities gain

Cocoa and coffee also rose with gains linked to stronger-than-expected economic data from China and Germany.

"We're having a bit of consolidatory day with people buying back some shorts," one soft commodity dealer said, adding volumes were fairly light with economic uncertainty keeping some market participants sidelined.

October raw sugar futures on ICE were up 0.44 cent or 1.4 percent at 31.23 cents a lb at 1213 GMT. The front month peaked at 31.65 cents a lb on Monday, just shy of its contract high of 31.68 cents set in late July.

Dealers noted forecasts for the sugar crop in Brazil's key center-south region were continuign to be downwardly revised with analyst Canaplan on Monday providing the lowest estimate so far among the main local consultants.

The prospect of demand from China was also supportive.

China has sold all the 200,000 tonnes of sugar from state reserves offered in the second auction this month, aiming to cover a deficit and cool record domestic sugar prices during the peak consuming season.

"A combination of a lower crop this year and next in Brazil and a heightend import program by China as a result of high internal prices and dwindling stocks to combat theses, would be a potent mixture indeed," brokers Sucden Financial said.

First month New York sugar is expected to revisit a Monday high of 31.65 cents per lb as a correction from this level could have completed, according to Reuters analyst Wang Tao.

October white sugar futures on Liffe rose $5.50 or 0.7 percent to $804.00 per tonne.

RESISTANCE BREACHED

Cocoa futures also rose with overall strength in commodity markets helped to provide the fuel for December futures on Liffe to breach key resistance at 1,921 pounds a tonne.

"If we close above 1,921 pounds tonight that is a technical signal to say the market has found a new area (to trade) and we may not see the recent lows for a while," one dealer said.

December cocoa on Liffe was up 24 pounds or 1.25 percent at 1,941 pounds a tonne after touching a one-month high for the contract of 1,943 pounds.

Dealers said the market was increasingly focussing on the prospect of a deficit in 2011/12 rather than the widely seen largely global surplus in 2010/11.

"The deficit figures seem to be getting a little bit bigger for next year. Conditions haven't been that good in the some of the growing regions in the past three or four weeks so you have to add a bit one (to deficit forecasts)," one dealer said.

A global surplus of about 300,000 tonnes is generally seen in 2010/11 while a drop in production could see the market swing to a deficit, possibly of more than 100,000 tonnes, in 2011/12.

Cargill expects world 2011/12 cocoa supplies to be adequate to meet demand, with the cushion of a sizable global surplus from the previous crop, the US agribusiness company said on Tuesday.

December cocoa on ICE was up $71 or 2.3 percent at $3,116 per tonne.

Arabica coffee futures on ICE also rose, tracking the advance in other commodity markets.

December arabica coffee on ICE rose 1.05 cents or 0.4 percent to $2.6940 per lb while November robusta coffee on Liffe climbed $27 to $2,372 a tonne.

Coffee beans from the next harvest due in October are being offered in Vietnam, but demand remains thin as buyers are waiting for prices to stabilise, traders said on Tuesday.

Copyright Reuters, 2011