Raw sugar hits fresh nine-month peak, arabica coffee rallies

ICE raw sugar prices hit a fresh nine-month peak on Monday as bullish technical signals prompted more fund short covering, while arabica coffee scaled another 1-year high.

March raw sugar was up 0.16 cents, or 1.1%, at 13.34 cents per lb at 1512 GMT, having hit 13.38 cents, the highest since late February.

ICE raw sugar speculators trimmed their net short position by 14,954 contracts to 103,432 in the week ended Dec. 3, CFTC data showed.

"What happens next depends on the funds and they tend to follow technical indicators which currently remain bullish," said Marex Spectron in a note.

It added the current rally is coinciding with tightening spreads and rising cash prices, both bullish signals. Longer term, however, sugar is capped by the ethanol parity, which Marex expects will be around 13.00-13.50 next year.

India's top sugar producing state, Uttar Pradesh, has kept the price that mills must pay to cane growers this season unchanged in a bid to help cut back the country's surplus sugar output.

March white sugar rose $4.00, or 1.2%, to $351.50 a tonne, having hit its highest since late February at $351.90.

March arabica coffee rose 3.3 cents, or 2.6%, to $1.2815 per lb, having hit $1.2840, its highest since October last year.

ICE arabica coffee speculators trimmed their net short position by 6,637 contracts to 956 in the week ended Dec. 3.

ICE-certified stocks have fallen from 2.5 million bags in March to around 2.1 million, boosting coffee.

Commerzbank said the International Coffee Organisation (ICO's) forecast of a 502,000 tonne deficit, while not large considering last season's 3.7 million tonne surplus, has likely driven the recent price surge.

It added, however, that prices should be capped given the 2020/21 crop in top producer Brazil could hit another record.

Colombia has laid out a road map to guarantee sustainable coffee production, with plans to increase quality and output.

March robusta coffee rose $5, or 0.4%, to $1,417 per tonne.

March New York cocoa was down $8, or 0.3%, at $2,599 a tonne, having settled up 1% on Friday.

ICE cocoa speculators trimmed their net long position by 3,157 contracts to 36,061 in the week ended Dec. 3.

Cocoa arrivals at ports in top grower Ivory Coast reached 787,000 tonnes between Oct. 1 and Dec. 8, exporters estimated, up 0.2% from the same period last season.

Ghana's cocoa arrivals reached 257,000 tonnes between Oct 1 and Nov. 21, exporters estimated, down 1.5% from the previous season.

March London cocoa fell 17 pounds, or 0.9%, to 1,844 pounds a tonne, under pressure from gains in sterling.