LONDON - ICE raw sugar futures bounced on Monday as the market readjusted to Friday’s sharp sell-off, while cocoa and arabica coffee futures fell pressured by a strengthening dollar.
Raw sugar futures on ICE jumped as the market consolidated after its biggest one-day slide in six months on Friday, with dealers focusing on talk that a Brazilian analyst had raised its 2011/12 centre-south Brazilian output forecast.
“It’s a bit of a bounce after Friday’s sharp losses,” said James Kirkup, head of sugar brokerage at ABN AMRO Markets (UK) Ltd.
“The supporting element in the market is the end-user,” Kirkup added, referring to reports of weekend physical offtake to take advantage of the slide in prices on Friday.
Egypt’s state-owned Sugar and Integrated Industries Company (SIIC) said on Monday it has bought 30,000 tonnes of raw sugar for October shipment.
Prospects for large northern hemisphere crops in the fourth quarter, notably in Russia, Ukraine and EU countries, as well as substantial exports from India, the world’s number 2 producer after Brazil, capped the upside of raw sugar futures.
ICE October raw sugar futures were up 0.23 cent or 0.8 percent at 27.75 cents a lb with March up 0.19 cent or 0.7 percent at 26.50 cents at 1118 GMT.
December white sugar futures on Liffe fell $4.0 or 0.6 percent to $683.20 a tonne in thin volume of 1,101 lots.
“We do not expect sugar prices to fall much further for the time being, as the fundamental data do justify prices at their current level,” Commerzbank said in a market report.
Cocoa supplies in pipeline
Cocoa futures on ICE fell, trading near 10-month lows basis second month, with upside potential limited by expectations of ample supplies from the coming main crops in West Africa.
ICE December cocoa was down $39 or 1.4 percent at $2,753 a tonne.
London March cocoa was down 19 pounds or 1 percent to 1,820 pounds per tonne, having earlier touched a contract low of 1,818 pounds.
Dealers said the market continued to be weighed by abundant supplies following a large global surplus in the 2010/11 season although a much tighter balance is anticipated in 2011/12 with many expecting a small global deficit.
“The prospect of large crops, and people marking down consumption, has turned the market lower,” a senior cocoa dealer said, referring to expectations that weak global economic conditions will limit cocoa consumption.
ICE arabica coffee futures softened under pressure from the firmer dollar, underpinned by a tight global market, and stood below a four-month high hit earlier this month.
ICE December arabica coffee futures were down 0.85 cent or 0.3 percent at $2.5955 per lb.
Second-month ICE arabica futures are set to face key support around the $2.56 area, said Brenda Sullivan, technical analyst at Sucden.
Dealers said the market was keeping a close watch on the outlook for next year’s Brazilian crop with the key coffee-flowering season starting this month and rainfall needed.
November robusta coffee on Liffe fell $19 or 0.9 percent at $2,090 per tonne in low turnover of 1,380 lots.
