ICE raw sugar, arabica coffee and cocoa futures edged higher on Wednesday as investors stayed cautious before a summit on the euro zone debt crisis that was expected to deliver pledges rather than firm commitments.
“Concerns (are) heightening that the outcome to contain Europe’s sovereign debt crisis in today’s EU summit could fall short of expectations,” Barclays Capital said in a commodities note. ICE raw sugar futures were slightly higher, supported by concerns over the impact of flooding in key producer Thailand.
“The problem is if they start cutting (cane) and there are logistical delays, then you do start losing sucrose content pretty quickly in the cane the longer it takes to get it from the field into the mills,” said a London-based broker. “We’ll have to see what the situation is like in November when they really get going and things need to start moving.”
ICE March raw sugar futures rose 0.06 cent or 0.2 percent to 27.00 cents a lb at 1218 GMT. “Market conditions remain thin and volatile, and it is therefore difficult to guess direction,” Nick Penney at Sucden Financial said. “In the wings lies the possibility of further physical off-take, but it seems current prices are unattractive,” said Penney, adding futures might have to fall to encourage pricing.
December white sugar futures on Liffe eased $1.20 or 0.2 percent to $727.30 per tonne. Dealers said the front month was supported by concern that rains in Central America could limit the amount of sugar available for delivery against the December contract, causing its premium to March to widen sharply this week.
“Quite a lot of trade were short, fully expecting around 180,000 tonnes of Centrals to be delivered, and we’re seeing a lot of wet weather in the Central region, which is causing people to be concerned about whether the crop will be cut in time to deliver against December, which has spooked the shorts,” the London-based broker said.
COFFEE
Arabica coffee futures on ICE firmed, rebounding from a slump of nearly 6 percent on Tuesday, underpinned by concerns wet weather might have damaged crops in Central America.
“There is reason for concern, because there has been lots of rain recently in Central America and Colombia, which puts into danger the 2011/12 crops which are due to be harvested soon,” said Stefan Uhlenbrock, soft commodities analyst with Germany’s F.O. Licht.
The rains have caused infrastructure damage and coffee cherries to fall from trees and could also damage quality. “It’s still quite early to make any assessment on any damage caused,” Uhlenbrock said. December arabica coffee futures on ICE were up 1.95 cent or 0.8 percent at $2.3850 per lb.
El Salvador cut its forecast for the forthcoming coffee harvest by 6 percent on Tuesday after assessing the potential damages to crops from weeks of non-stop downpours. “Infrastructure has been affected severely in certain places and there will be delays to the shipment of beans,” Uhlenbrock said. January robusta coffee on Liffe was up $14 or 0.8 percent at $1,888 a tonne.
COCOA
Cocoa futures on ICE were higher, although remaining stuck within A recent range as bearish fundamentals weighed. The most recent data from the U.S. Commodity Futures Trading Commission showed that managed money held a short position of more than 13,000 lots as of Oct. 18, down only slightly from a record net short position two weeks previous. “The market is relatively short, we could do with a technical bounce,” a London-based broker said.
ICE December cocoa was up $31 or 1.2 percent at $2,667 a tonne. The contract dipped to $2,523 last week, the lowest level for the front month in more than two years. Harvest is under way in top producers Ivory Coast and Ghana, and dealers said farmers were holding back waiting for better prices.
“There’s no doubt there’s little bits of cocoa being hedged,” said the broker. London March cocoa was up 11 pounds or 0.7 percent to 1,711 pounds per tonne.