Sugar steadies

Sugar steadies

FMCG SUPPLIER NEWS

IOL Business - Jan 9th 2012, 07:49

ICE sugar steadied but a stronger dollar helped push arabicas lower on Friday, after slides in both commodities the previous day, while cocoa was little changed with prices capped by ample African supplies. 

Softs markets failed to react to data showing solid growth in US employment last month after the jobless rate dropped to a near three-year low of 8.5 percent, offering the strongest evidence yet of an acceleration in economic activity.

ICE benchmark raw sugar futures rose 0.02 cent or 0.09 percent to 23.15 cents a lb at 17:45 SA time, still below a seven-week peak of 24.65 cents per lb touched on Wednesday.

Sugar futures had fallen more than 5 percent on Thursday after hitting a wave of sell-stops.

Some dealers cited talk of index fund re-weighting in sugar, expected to start on Monday, which should result in net buying of the sweetener. Dealers said the market expected index funds to boost weightings of sugar after last year's price slide.

Potential upside in sugar prices was limited by big crops in the EU, Russia, Ukraine, India and Thailand.

“The fundamental sugar story and perhaps the medium term picture remains in the top pocket of the sugar bears,” said Thomas Kujawa of broker Sucden Financial.

The European Union may ditch upcoming sugar import tenders due to ample domestic supplies, trade sources said on Thursday.

London March white sugar futures were down 50 cents or 0.08 percent to $603.00 per tonne in modest volume of 2,024 lots.

India has extended the deadline for mills and factories to apply for sugar export permits, the government said on Friday, a move expected to boost sluggish exports from the world's second biggest producer.

“I am bearish in the first half of the year but bullish in the second half. I don't think the Brazilian crop will increase as much as some people are expecting,” said Kona Haque, a soft commodities analyst with Macquarie Bank.

She said the news about Indian permits was a bearish signal for sugar as it boosted prospects for exports.

The US government forecaster warned on Thursday that La Nina, the weather phenomenon blamed for searing drought in the southern United States and South America, may last longer than expected into the Northern Hemisphere spring.

ICE March arabica futures eased, weighed by the stronger dollar, after their biggest fall in more than two months on Thursday, driven by investor sales, and were down 2.2 cent or 1 percent to $2.1735 per lb in choppy dealings.

Coffee's fundamentals are bullish early in 2012 due to weather-related problems in major washed-arabica producer Colombia, which have led to reduced crop forecasts.

Second-position ICE arabica futures contracts were still above a one-year low of $2.1235 per lb touched on Dec. 19, when they were pressured by concerns over the euro zone crisis and worries over the global economic outlook.

Vietnamese Sales

London March robusta coffee futures were down $50 or 2.8 percent to $1,724 per tonne, having earlier touched a 14-month low of $1,723 per tonne, basis second month, pressured by a big harvest in top producer Vietnam.

Dealers anticipated Vietnamese origin selling ahead of the Tet new year festival.

ICE March cocoa futures were down $2 or 0.1 percent to $2,026 in moderate turnover, with upside potential limited by plentiful African supplies.

“Prices are very attractive at these levels. Have we reached bottom? Probably not,” Haque said, adding that industry appeared to have ample near-term coverage for requirements.

London March cocoa was up 3 pounds or 0.2 percent to 1,335 pounds per tonne. - Reuters