(Reuters) – Raw sugar futures rallied for the third straight session on Monday, reaching a one-month peak on short covering, while coffee and cocoa prices turned lower as the U.S. dollar firmed.
Dealers said a strengthening of Brazil’s real to a one-year high may have acted as a catalyst for the rally, though the currency of the top sugar and coffee grower later turned lower.
“The real’s recovery in the face of greenback strength is remarkable and forced the sugar market to pay attention,” said Commonwealth Bank of Australia analyst Tobin Gorey.
A stronger real makes sales less attractive in local currency terms in the world’s top producer of both sugar and coffee and is supportive for dollar prices of both commodities.
October raws settled up 0.2 cent, or 1 percent, at 20.55 cents per lb after rising to a one-month peak of 20.92 cents. They have rallied around 8 percent in the past three sessions.
“The trade got short after the strong (Brazil) crushing numbers and people have been forced to cover. I think today’s move is additional short covering,” one dealer said.
Some also looked at forecasts for some rain in Brazil’s main cane region, which could slow harvest though improve prospects for the following year, while others noted the jump in the commercial gross long position in the week ended Aug. 2.
“The fact that commercial longs (and) end users are buying that much has long specs confident and perhaps short specs covering,” one U.S. trader said.
October whites settled up $1.70, or 0.3 percent, at $553.10 per tonne.
“Sugar prices will average higher year-over-year over the coming quarters as the global market turns to deficit,” BMI Research wrote in a note.
Arabica coffee futures eased with September settled down 1.4 cent, or 1 percent, at $1.411 per lb.
Dealers noted Brazil’s coffee harvest was now well advanced with a large crop anticipated, limiting the upside for price. The market shrugged off an estimate by Brazil’s largest coffee cooperative, Cooxupe, that the frosts in July caused at least a 5 percent loss to the 2017 crop.
Robusta coffee futures were underpinned by slowing exports from top producer Vietnam.
September robusta coffee futures settled up $2, or 0.1 percent, at $1,825 per tonne.
December New York cocoa ended down $12, or 0.4 percent, at $2,975 per tonne. September London closed down 16 pounds, or 0.7 percent, at 2,404 pounds per tonne.
