Raw sugar futures on ICE hit two-year highs on Monday as escalating worries over falling supplies more than offset concerns over the economic impact of the coronavirus outbreak. Arabica coffee, meanwhile, hit a three-month low. March raw sugar was up 0.3 cents, or 2.1%, at 14.91 cents per lb by 1539 GMT, having hit its highest since January 2018 at 15.01 cents.
Mills in India, a leading sugar producer, had output of 14.1 million tonnes of sugar from Oct. 1 to January 31, down nearly 24% from a year earlier because of limited cane supplies. Trade house Sucden & Denrees noted that Brazil, another leading producer, has entered its quiet inter-crop period just as Asian demand is expected to pick up ahead of Ramadan and production forecasts in other key regions are being revised lower.
"Despite the coronavirus outbreak and (falling) energy prices, funds could further increase their long position," it said. "The 2019/20 sugar deficit is (widening). A return to a balanced situation seems out of reach even if Brazil increases its sugar mix." ICE raw sugar speculators raised their net long position by 14,600 contracts to 85,593 in week to January 28, CFTC data showed.
March white sugar was up $11.80, or 2.9%, at $418.00 a tonne after reaching a 2-1/2 year high of $418.70. Indicating tight whites supply, the premium for whites versus raws was near its highest for front-month contracts since September 2018 while the entire whites futures market curve is backwardated.
March arabica coffee was down 4.7 cents, or 4.6%, at 97.95 cents per lb after touching a three-month low of 97.85 cents. A sharp increase in ICE-certified arabica stocks this year, coupled with a potential record crop in Brazil, is weighing on coffee.
Rabobank said the coronavirus has caused widespread coffee shop closures in China, raising concerns over Chinese demand. ICE arabica coffee speculators cut their net long position by 7,179 contracts to 6,529 in the week to January 28, CFTC data showed. March robusta coffee fell by $38, or 2.8%, to $1,304 a tonne.
March London cocoa was down 6 pounds, or 0.3%, at 1,949 pounds a tonne. Cocoa arrivals at ports in top grower Ivory Coast reached 1,419,000 tonnes between Oct. 1 and February 2, exporters estimated, up 0.2 % from the previous season. March New York cocoa fell $3, or 0.2%, to $2,772 a tonne. ICE New York cocoa speculators raised their net long position by 8,659 contracts to 31,477 in the week to January 28, CFTC data showed.