ICE sugar soars

Raw sugar futures on ICE jumped to a nine-month high on Tuesday, on fund buying and commercial short-covering after the prior session’s breach of the key 15-cent level, while the spot robusta coffee spread widened to a contract low. Coffee futures rose, as traders eyed continued dry weather in a key robusta growing region in Brazil. London cocoa futures rose for the eighth straight session to a five-week high on follow-through buying.

Raw sugar futures reached the nine-month peak of 15.53 cents a lb as a golden cross – when the 50- and 200-day moving averages cross over – formed below the market, a technically bullish indicator. The extended move higher came after total open interest surged by 18,600 lots in Monday’s rally, the highest since late-August, exchange data showed. ICE spot raw sugar futures settled up 0.38 cent, or 2.5 percent, at 15.49 cents per lb, after touching 15.53 cents, the highest since late January.

“It’s specs seeing a chart that looks exceedingly bullish, or trade looking at short positions that are bleeding a lot of cash,” said one senior London-based trader. Traders also cited wet weather hampering cane harvesting and reducing sugar content in center-south Brazil. Sugar spreads also surged, with the March/May spread’s premium reaching a contract high of 0.49 cent per lb on concerns about global supplies, trader said.

December white sugar futures settled up $10.20, or 2.5 percent, at $417.70 per tonne, the highest since late November 2014. Robusta coffee futures firmed on chart-based buying, with some traders concerned about output in Brazil, but the upside for prices was limited by the start of Vietnam’s harvest.

“The robusta situation doesn’t appear to be comfortable in general because you see problems with rains in (Brazil’s) Espirito Santo,” said Rodrigo Costa, director of coffee for Societe Generale in New York. “Indonesia is also an issue people are talking about.” January robusta coffee settled up $16, or 1 percent, at $1,645 per tonne.

The spot robusta spread discount fell as low as $44, a contract low, after the November contract’s first notice day on Monday. December arabica settled up 1.45 cent, or 1.2 percent, at $1.2025 per lb. In cocoa, London March futures ended up 6 pounds, or 0.3 percent, at 2,211 pounds a tonne, the highest close since September 25. New York March cocoa finished up $6, or 0.2 percent, at $3,301 per tonne, after inching up the highest since September 25 at $3,302.

Copyright Reuters, 2015

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