Sugar, coffee steady with focus on Brazil weather

(Reuters) – Raw sugar futures on ICE held steady on Monday near a 2-1/2-year peak with dealers focused on improving harvest weather in Brazil, while arabica coffee was little changed as worries over frost risks eased.

A weakening pound, pressured by concerns over the coming British vote on EU membership, gave support to London cocoa.

Raw sugar steadied, with a focus on improving conditions for the cane crush in centre-south Brazil.

“The weather across Brazil’s centre-south has improved markedly over the past few days as dry weather returns across the region allowing the crush to push into top gear again and port loadings to get back to normal,” a broker said.

Dealers noted that speculators again boosted the record net long position in raw sugar contracts on ICE they have held since early May in the week ended June 7, according to U.S. data.

“With a massive (and still growing) fund and spec position in sugar currently, we would have seemed set for a correction shortly, but this pesky thing called frost has reared its head,” Green Pool Commodities said in a weekly report.

Green Pool was referring to a forecast last week for isolated frost in Brazil, which supported raw sugar futures, and drove a rally in arabica coffee.

July raw sugar was up 0.04 cent, or 0.2 percent, at 19.74 cents cents per lb at 1000 GMT, just below Thursday’s high of 19.92 cents last reached in October 2013.

August white sugar was up 40 cents, or 0.08 percent, at $529.40 per tonne.

Arabica coffee futures dipped slightly, moving further away from Thursday’s 13-month high, pressured by a weaker oil market, with worries over a possible impact from frost on the Brazilian arabica crop receding.

Traders said the risk of frost was largely worked in to prices.

July arabica coffee was down 0.3 cent, or 0.2 percent, at $1.3665 per lb, well below the 13-month peak of $1.45 on Thursday, when forecasts for frost in isolated parts of Brazil caused record futures volume.

July robusta was down $1, or 0.06 percent, at $1,642 per tonne, underpinned by a very poor crop in Brazil due to drought.

London cocoa prices were higher, supported by weakness of the pound on concerns that Britons might vote to leave the European Union.

September London cocoa was up 21 pounds, or 0.9 percent, at 2,284 pounds per tonne while September New York cocoa was off $18, or 0.6 percent, at $3,081 per tonne.