LONDON: Raw sugar futures on ICE steadied on Friday as oil prices rallied and El Nino-linked weather concerns persisted, while coffee gained.
SUGAR
Raw sugar was little changed at 20.09 cents per lb by 1352 GMT after falling for a fifth consecutive session on Thursday to close down 1.6 percent.
Consumers and traders are likely to have come in on the buy side, seeing good value after the recent falls as there is no shortage of bullish drivers in the market, said consultant Michael McDougall. These include excess El Nino-linked rain in top grower Brazil and further gains in energy prices, which can tempt cane mills to lower sugar output and ramp up ethanol fuel production.
Elsewhere, India has extended the deadline for allowing duty-free imports of 1 million metric tons of raw sugar to December 31 from October 31, giving importers more time to bring in the commodity to the world’s biggest sugar-consuming country. Sugar prices in India, also the world’s second-largest sugar producer, are soaring as the nation experiences lower-than-usual monsoon rains owing to the El Nino weather pattern. White sugar was little changed at USD533 a metric ton.
Raw sugar on Thursday, edged up 0.2 percent to 20.49 cents per lb but remained some way off last week’s 19-month peak of 21.29.
Sugar was benefiting from surging energy prices, which encourage mills to ramp up production of the cane-based biofuel ethanol, at the expense of sugar.
Excess El Nino-linked rains are expected to persist in top grower Brazil, meanwhile, disrupting the harvest and lowering the sucrose in the cane.
White sugar was little changed at USD543.90 a ton.
COFFEE
Arabica coffee rose 0.4 percent to USD3.1360 per lb, having touched a six-week high of USD3.1820 on Wednesday. Coffee is being driven by critically low exchange inventories and a strong real, which deters exporters in top grower Brazil from selling dollar-priced coffee by lowering local-currency returns.
Traders are monitoring this Sunday’s presidential election in Brazil, which could cement further gains for the real if opposition candidate Flavio Bolsonaro wins, as is widely expected.
Robusta coffee on Thursday rose 1.7 percent to USD3,357 a ton. Arabica coffee fell 3.4 percent to USD3.0525 per lb at 1257 GMT, after touching USD3.1820 on Wednesday, its highest since September 9. “Brazilian exports are strong and Northern Hemisphere harvests are approaching, but meaningful inventory rebuilding probably remains several months away,” noted independent broker and consultant Michael J Nugent.
Green coffee stocks in Japan and Europe, two of the largest markets for the beverage, decreased in August from last year, according to figures from industry groups.
Elsewhere, the market is paying close attention to the presidential election in Brazil on Sunday, which opposition candidate Flavio Bolsonaro is expected to win.
A Bolsonaro win is seen as bullish for the Brazilian real. It also deters Brazilian exporters from selling dollar-priced coffee by lowering their local currency returns.
Robusta coffee fell 2.3 percent to USD3,287 a metric ton.
COCOA
London cocoa was little changed at £4,300 a ton, having settled down 3.9 percent on Thursday. New York cocoa was little changed at USD5,573 a ton.