Raw sugar futures on ICE moved up within sight of a new 29-year peak in early trade yesterday, underpinned by global supply tightness, while ICE cocoa fell and arabica coffee was little changed in moderate volumes.
Dealers said the sugar market was expected to remain tight for at least another couple of months, although the supply crunch should ease slightly later this year as the new centre-south Brazilian harvest comes onstream.
Benchmark ICE front-month raw sugar hit a 29-year peak of 30.40 cents a lb on Monday, but momentum has since faded.
The postponement of an Egyptian sugar buying tender may have doused the rally, dealers said.
Egypt's state-owned Sugar and Integrated Industries Company said on Monday it had indefinitely delayed a tender to buy 50,000 tonnes of raw sugar. "It seems as though the rally has stalled," said Jake Weatherall, a soft commodities trader with Rabobank. "Egypt postponed a tender.
I think they (Egyptians) think that prices may be coming down."
However, Weatherall said he still considered the global sugar market to be tight.
ICE March raw sugar futures were up 0.31 cent or 1.06 per cent to 29.59 cents a lb at 1207 GMT.
London (Liffe) March white sugar was up $2.4 (Dh8.80) or 0.3 per cent at $736 per tonne in slim volume of 2,169 lots.
The European Commission on Monday dismissed calls from Australia, Brazil and Thailand to withdraw its decision allowing an extra 500,000 tonnes of unsubsidised sugar to be exported, calling its move legal.
Cocoa futures on ICE fell to the lowest in two and a half months with the decline gathering momentum as key support was breached, dealers said.
"New York was the key driver [of weakness in cocoa]. We hit some stops when we went through the recent lows," said one London dealer.
March cocoa stood $78 or 2.5 per cent lower at $3,074 a tonne, recovering slightly from the day's low of $3,040. The contract had twice rebounded off support just above $3,100 in mid-November but convincingly breached that level yesterday.
Dealers said the market had also been weakened by long liquidation ahead of March's first notice day on Februay 12.
Industry buying may have helped stem the market's fall.
Prices in London were dragged down by weakness on ICE. May futures on Liffe fell £49 (Dh286.98) or 2.2 per cent to £2,176 a tonne.
Dealers said improving prospects for production in Ivory Coast may have contributed to the market's retreat. Good rains during the last few days have boosted prospects for cocoa pod development after weeks of dry conditions.
A recent decline in global equity markets has also raised questions about the strength of an anticipated rebound in global cocoa grindings after a recession-linked dip in 2009.
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