NEW YORK/LONDON: Raw sugar futures turned positive after hitting a six-year low on Friday as top-producer Brazil’s real currency rallied against a sagging US dollar and the low prices attracted buying.
New York cocoa on ICE Futures US jumped on a sharp downturn in the US dollar, while arabica coffee fell in a pullback from the prior session’s gains on a resumption of speculator short selling.
May raw sugar gained 0.06 cent, or 0.5 percent, to settle at 12.68 cents a lb, having earlier dipped to a six-year low for the front month of 12.39 cents.
The gains came as the Brazilian real currency strengthened against the US dollar.
The currency’s recent woes had added to an already bearish mood in a market that is over-supplied after several years in which production has exceeded demand.
A weak real means that growers in Brazil are to some extent shielded from any fall in international prices.
In addition, the six-year lows proved attractive to commercial buyers, and prompted funds looking to book profits for the first quarter of 2015 to cover short positions, boosting the price, said Phil Pia, desk broker for Societe Generale in New York.
“The price is attractive for end-users of sugar,” Pia said. May white sugar futures gained $ 2.80, or 0.8 percent, to settle at $ 366.50 a tonne.
May New York cocoa rose $ 75, or 2.8 percent, to settle at $ 2,790 a tonne, after rising as high as $ 2,795 on the drop in the US dollar, traders said.
The gains erased the prior session’s steep losses, and marked the May contract’s first gain after 12 straight sessions of losses and its largest single-session day of gains since Feb. 9.
A weaker dollar boosts greenback-traded commodities like cocoa by making them more attractive to holders of other currencies.
May London cocoa settled up 22 pounds, or 1.1 percent, at 1,945 pounds a tonne.
May arabica coffee futures lost 0.80 cent, or 0.6 percent, to settle at $ 1.4335 per lb, in a correction from gains in the prior four sessions that saw some new speculative short selling, a US trader said.
May robusta coffee futures gained $ 5, or 2.8 percent, settling at $ 1,820 a tonne. The contract had rebounded from a low of $ 1,685 a week ago to a peak on Thursday of $ 1,855.