Sugar jumps, London cocoa hits 5-year high as pound drops

 Raw sugar futures on ICE rallied more than 3 percent on Monday, on chart-based
buying, while sterling-based London cocoa surged to a 5-year high on Monday as the pound slid to a 31-year low, bucking the
session's weak trend in larger commodity markets.
    Coffee futures fell for the second straight day as the U.S. dollar strengthened, in the aftermath of Britain's shock vote to
leave the European Union. 
    October raw sugar settled up 0.48 cent, or 2.5 percent, at 19.64 cents per lb.
     "There's some long-term players who are protecting the market a little bit. They're playing on their ability to
activate shorter-term buy signals and the fact that selling is not formidable," said James Cassidy, director, global head of
Sugar Derivatives for Societe Generale in New York,     "We never closed below the existing congestion range."
    The most active contract has not settled below 19 cents in three weeks and that level has provided some technical support,
particularly as prices rose above previous session highs.
    Still, dealers warned of risks of a selloff after the latest U.S. Commitments of Traders report revealed the extension of a
net long position held by speculators to a new record.
 
    The July contract will expire on Thursday.
    August white sugar settled up $9.70, or 1.8 percent, at $541.60 per tonne.
    The plunging pound supported London cocoa prices as it made it cheaper for holders of non-UK currencies to buy
sterling-based cocoa futures positions. 
    New York cocoa, in turn, fell as the two markets adjusted to each other.
    "Sell New York, buy London: you are seeing a natural adjustment going on between the two markets through arbitrage.
Fundamentals are very much secondary at this point," one broker said.
    London cocoa prices have made their biggest two-day rally in 4-1/2 months.
    British 10-year government borrowing costs dropped below 1 percent for the first time ever and sterling tumbled to a
31-year low against the dollar as investors bet Britain's vote to leave the EU will trigger a Bank of England rate cut.
 
    London September cocoa settled up 36 pounds, or 1.6 percent, at 2,361 pounds per tonne, after soaring to 2,374
pounds, the highest for the second position since March 2011.
    New York September cocoa settled down $37, or 1.2 percent, at $2,986 per tonne.
    September arabica settled down 1.1 cent, or 0.8 percent, at $1.3605 per lb. 
    September robusta settled down $5, or 0.3 percent, at $1,664 per tonne.

(Reuters)

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