Sugar Consolidates After Sharp Rise; Coffee, Cocoa Gain

September 19th, 2016


Category: Cocoa, Sugar

Sugars-Full(Reuters) – Raw sugar futures edged up on Monday as prices consolidated after an explosive rally to a four-year high at the end of last week, while coffee and cocoa prices also rose.

March raw sugar was up 0.09 cents or 0.4 percent at 22.56 cents per lb by 1223 GMT.

The contract rose more than 8 percent on Friday to a peak of 22.86 cents on Friday, the highest for the second month since August 2012, although gains had been pared by the close.

“After the huge move on Friday, everyone’s taking stock,” one London dealer said.

Dealers said the rise had been largely technically-driven after the market broke out of its recent trading range although there was also background support from tightening supplies.

“There’s no doubt that if you look at the broader picture, there is tightness in sugar and these high prices are kind of justified to strip away demand to ease what looks like a deficit situation,” the dealer said.

Rabobank forecast on Friday there would a global deficit of 7.2 million tonnes, raw value, in the upcoming 2016/17 season (October/September), following a deficit of 7.9 million tonnes in the current season.

Commodities group RCMA confirmed on Monday it was one of the receivers in the first expiry of the containerised white sugar contract on Friday.

ICE Futures Europe introduced the container contract to address a need for smaller quantities of sugar that can be delivered on container ships alongside other goods.

“As with any nascent contract, aside from the value of the positions delivered/received, we believe it is key to have the participants carry the position to expiry for them to test the mechanisms of the container physical delivery in containers,” RCMA Group sugar trader Alban Bailbled said.

December white sugar futures were off $2.30 or 0.4 percent at $581.10 per tonne.

Robusta coffee futures rose, also supported by tightening supplies.

“The market’s focus seems to be fixed on tight carryover inventories at origin, particularly in Vietnam and Brazil,” said Abah Ofon, analyst with Agrimoney’s Global Coffee Monitor.

November robusta coffee was up $7 or 0.4 percent at $1,944 a tonne while December arabica coffee rose 1.55 cents or 1.0 percent to $1.4995 per lb.

Cocoa futures rose with March London up 23 pounds or 1.05 percent at 2,215 pounds a tonne and March New York rising $28 or 1.0 percent to $2,810 per tonne.

Cocoa arrivals at ports in top grower Ivory Coast reached around 1,478,000 tonnes by Sept. 18 since the start of the season on Oct. 1, 2015, exporters estimated on Monday, down from 1,761,000 tonnes in the same period the previous season.


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