Raw sugar nears 2012 high in overbought territory

ICE raw sugar futures jumped again on Tuesday, nearing last week’s 2012 peak and extending technically overbought levels as dealers remained focused on tight supplies, while the spot spread narrowed ahead of October’s expiry on Friday.

Cocoa prices continued to claw back from last Friday’s tumble while coffee was mixed.

March raw sugar futures extended Monday’s 1.9 percent rise to settle up 0.3 cent, or 1.4 percent, at 23.44 cents per lb, a technically overbought level on the 14-day relative strength index amid an impending 2016/17 deficit.

“I think the general view is the deficit we’ve got coming for the next season beginning on October 1st is going to get more and more prevalent,” said a trader in London.

Open interest in October futures fell by 16,506 contracts to 54,639 contracts on Monday ahead of expiry this coming Friday, a level below this time last year, traders said.

The October/March spread SBV6-H7 narrowed to as much as a 0.42-cent discount from 0.58 cent on Monday.

“The October/March spread is strong this morning whereas in some recent years it has collapsed,” said Tom Kujawa, co-head of the Softs Department for Sucden Financial Research.

“Clearly the market is different this time with the shorts relatively more nervous.”

December white sugar futures settled up $6.30, or 1.1 percent, at $605.20 per tonne.

In coffee, November robusta futures settled up $20, or 1 percent, at $1,995 per tonne.

“Delayed rainfall in Vietnam was the cause of fairly pessimistic views, which have become even more pessimistic as of late, despite very high rainfall levels in mid-May,” said Rabobank in a report, about the world’s biggest robusta grower.

“We do not rule out a further cut to our Vietnam estimate, but we still believe in a single-digit percentage drop year-on-year.”

December arabica futures settled up 0.15 cent, or 0.1 percent, at $1.537 per lb.

Dealers said arabica supplies remained ample, in contrast to the robusta market which has a tighter outlook. [nL2N1BX0GM)

Cocoa prices firmed as buyers said top grower Ivory Coast’s 2016-17 season faces a slow start as fewer beans arrived at ports ahead of the new trading period when a new, likely higher, price will take effect because of a poor mid-crop harvest.

New York December cocoa settled up $23, or 0.8 percent, at $2,868 per tonne, while London March cocoa settled up 12 pounds, or 0.5 percent, at 2,233 pounds per tonne.

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