Raw sugar futures on ICE reversed sharp losses and climbed back to 19 cents per lb on Tuesday, in a volatile session buoyed by harvest-delaying rain and forecasts for cold temperatures in a part of top grower Brazil. Coffee and New York cocoa prices were also higher. Soft commodities joined the session’s firm trend in larger markets as the 19-commodity Thomson Reuters CoreCommodity Index rose to a seven-month high, climbing for a tenth straight session.
Raw sugar futures initially fell sharply, after the prior session closed well below an intraday 2-1/2-year high, but then rallied as U.S. traders got to their desks. “The bounce was the result of good buying underneath, some positive noise and response to price recoveries,” said James Cassidy, director, global head of Sugar Derivatives for Societe Generale in New York.
The “noise” included reports of continued rain in Brazil’s main center-south region delaying harvest and a forecast for possible frost in a southern state there. “Insiders are not expecting damaging cold,” Cassidy said. Spot July raw sugar futures settled up 0.22 cent, or 1.2 percent, at 19 cents per lb, after trading from 18.26 cents to 19.14 cents.
The move roughly followed the Brazilian real, which was initially weak against the U.S. dollar before firming. “The bulls will argue commodities in general are undervalued,” said Tom Kujawa, co-head of the softs department at Sucden Financial Sugar. “The bears will argue it’s ‘overdone’, the funds are overly long and will soon be either profit taking or rolling (positions.)”
August white sugar settled up $6.20, or 1.2 percent, at $513.90 per tonne. Arabica coffee futures rose for the fifth session to reach a three-week high, extending gains above the 200-day moving average and underpinned by harvest-hampering rain in Brazil. July arabica coffee settled up 0.5 cent, or 0.4 percent, at $1.322 per lb. July robusta settled up $24, or 1.4 percent, at $1,689 per tonne.
New York cocoa futures briefly rose above the 200-day moving average for the first time in four weeks, buoyed by the firm British pound, which in turn pressured the London market. September New York cocoa settled up $20, or 0.7 percent, at $3,073 per tonne, while September London cocoa settled down 4 pounds, or 0.2 percent, at 2,244 pounds per tonne. Traders kept an eye on quality concerns in top grower Ivory Coast, where exporters are rejecting roughly half of cocoa port arrivals.