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Sugar at four-month top, March deliveries loom

Raw sugar futures sprang to a four-month peak on Monday on fund and investor buying as players turned their focus into the upcoming delivery for the spot March contract when it goes off the board on Wednesday.

Coffee was mixed and cocoa was modestly firmer.

New York's March raw sugar contract climbed 0.31 cent to close at 26.50 cents per lb, just below the session peak at 26.69 cents, which is the highest intraday level for the spot contract since October 28, 2011.

London's May white sugar increased $9.70 to conclude at $671.10 per tonne.

"People are rolling out of March and we could see a noticeable drop in open interest," said Country Hedging Inc senior analyst Sterling Smith.

Dealers said the sugar front-month premium indicated potential for a large delivery against expiry of the March ICE raw contract on February 29.

But Smith and other sugar brokers pointed to the fact that ICE Futures US data showed open interest in the previous two sessions in the March raw sugar contract has dropped over 24,000 lots.

Open interest as of Friday stood at 40,537 lots.

"We could drop 30,000 in the next three days so the amount of deliveries remains fluid," a dealer for a brokerage house said.

London-based brokers said the delivery, likely to go to a sole receiver, was expected to stand at between 500,000 and 1 million tonnes.

Brokers said the sugar will probably come from the smaller north-east crop of leading producer Brazil, Thailand and Central America.

Logistical constraints may prune the amount of sugar from Thailand, while Central American sugar exporters could move their sugar to the US and Mexico, where tightly supplied markets could fetch them higher prices.

Smith said sugar is trading at the upper end of its trading range, and other analysts said the overbought market is vulnerable to a setback.

"We're vulnerable to the risk of a correction (down)," said James Kirkup, head of sugar brokerage at ABN Amro Markets.

Market participants kept a close watch on the front-month robusta premium in the London coffee market, which has seen sharp volatility in recent weeks.

The market was focused on the extent of origin selling from top producer Vietnam, with a risk the front-month premium could widen again in the next few weeks, said Andrea Thompson, analyst with CoffeeNetwork, a subsidiary of INTL FCStone.

London's May robusta futures fell $44 to end at $2,012 a tonne.

New York's May arabica rose 1 cent to finish at $2.046 per lb.

Arabica coffee futures on ICE edged up, with upside capped by the firmer dollar.

"The dollar is weighing - there is general commodity selling, with oil going down," Thompson said.

Cocoa futures moved higher, sweeping past a topside barrier to enable New York bean values to trade over $2,400 per tonne.

New York's May cocoa futures added $43, or 1.8 percent, to finish at $2,400 a tonne, down from a session peak at $2,443.

Prices were underpinned by recent tight arrivals of beans in West Africa.

The firmer dollar limited upside potential.

London May cocoa increased 29 pounds, or almost 2 percent, to finish at 1,542 pounds per tonne.

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Sugar and cocoa climb (23-Feb-2012)

Posted by Flora Sawita Labels: Futures Cocoa and Coffee, Futures Sugar

Raw sugar extended its gains and rose to a 3-1/2 month high on Wednesday, in part due to concerns about nearby supply tightness, while cocoa futures hit a four-week high after climbing above a key technical level.

Coffee futures consolidated lower.

March raw sugar on ICE gained 0.41 cent, or 1.6 percent, to close at 25.76 cents per lb, the highest close since November 9, after rising above the 200-day moving average on Tuesday.

Dealers said there was talk that one major trade house may take delivery of most, if not all, the raw sugar delivered against the March contract which expires on February 29.

"With expectations that a potential receiver is looking to take March (raws) on, the structure is firming and, in the short term, this implies tightness of supply or at least increased off take," Nick Penney of Sucden Financial said in a market update.

The premium for the front month closed at 1.05 cents, up from around 0.90 at the close on Tuesday.

"Prices have been recently supported by a slowdown in exports from Brazil in January and downgrades to Mexico's sugarcane harvest following the ongoing drought," Goldman Sachs said in a market note on Wednesday.

London May white sugar futures climbed $6.10, or 1 percent, to end at $649.30 per tonne.

Wilmar International Ltd posted a 57 percent jump in quarterly profit, boosted by a huge revaluation gain in its core palm oil business and from its enlarged sugar operations, but investors dumped shares on concerns about declining margins.

ICE cocoa extended Tuesday's gains on ICE after rising above the 100-day moving average of $2,407 per tonne basis the second position, attracting technical buying.

May cocoa on ICE rose $14 to settle at $2,438 a tonne, the highest settlement since January 26.

The March contract closed at a $19 premium to May, compared with $32 on Tuesday.

On Liffe, dealers said a key short-term focus was the expiry of March options on Liffe next week.

March cocoa on Liffe rose 23 pounds to close at 1,571 pounds a tonne while May ended up 22 pounds at 1,578 pounds.

Arabica coffee futures on ICE fell in an inside day, giving back Tuesday's gains and tracking losses in many other commodity markets linked to diminished risk appetite.

The market felt pressure from profit-taking and origin selling.

May arabica coffee dropped 4.20 cents, or 2 percent, to finish at $2.0185 per lb.

The coffee market was also weighed by continued expectations for a large crop in top grower Brazil.

Robusta coffee futures on Liffe were also lower with May closing down $23 at $1,950 a tonne.

March closed at a $2 discount to May with diminished concern about potential tightness in available deliverable supplies.

The front month had soared to a premium of more than $200 to May last week.

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Sugar hovers above three-week low

Posted by Flora Sawita Labels: Futures Sugar, USA

Raw sugar futures on Thursday hovered near a three-week low hit the previous session, while the rest of the softs complex was mired in range-bound business.

Ample sugar supplies hampered its upside potential while cocoa benefited from tightening supplies in top grower Ivory Coast.

"We're marking time a little bit (waiting for) the unemployment number," Country Hedging Inc senior analyst Sterling Smith said, referring to the report on January US employment and payroll growth due on Friday.

March raw sugar futures on ICE slipped 0.11 cent to close at 23.48 cents per lb.

On Wednesday, the contract hit a three-week low of 23.43 cents.

London's March white sugar futures rose 10 cents to finish at $629.80 per tonne.

"Everyone is quite convinced that the days of deficit are behind us," said Gary Mead, editor of worldcrops.com.

Barclays Capital forecast sugar prices would average 22.4 cents in the first half of 2012.

"Despite lower Brazilian production, the move to a larger global market surplus of 5.4 million tonnes in 2011-12, along with an increase of India's exportable surplus and strong production prospects in key Northern Hemisphere producers, will limit upside on prices," Barclays Capital said in a market note.

Sugar production in Brazil's center-south region slowed to a trickle during the first half of January, data from cane industry association Unica showed on Wednesday, as a disappointing harvest drew to a close.

Cocoa futures edged higher with production in Ivory Coast set to fall from last year's bumper levels due to a lack of rain, insufficient crop spraying and ageing trees.

Cocoa farmgate prices ticked up in Ivory Coast's main growing regions last week as the price of beans at ports rose and farmers said they were starting to see a shortage of beans up-country.

New York's March cocoa futures ended unchanged at $2,225 a tonne, and London's Liffe May cocoa futures gained 5 pounds to finish at 1,465 pounds a tonne.

New York's March arabica contract rose 1.50 cents to close at $2.156 per lb.

May robusta coffee on Liffe fell $22 to close at $1,826 a tonne.

Dealers said an expected large Brazilian crop this year was keeping the market on the defensive.

Vietnam exported an estimated 130,000 tonnes, or 2.17 million bags, of coffee in January, a drop of 39.5 percent from the same month last year, the government said on Thursday.