Raw sugar heads back towards 5-week low; arabica coffee gains nearly 4%

Raw sugar futures on the ICE exchange fell on Thursday, heading back towards a recent five-week low, as energy prices continued to decline, while arabica coffee surged nearly 4%.

Sugar

Raw sugar settled down 0.26 cents, or 1.4%, at 18.22 cents per lb, after setting a five-week low of 17.92 cents on Tuesday. Sugar is under pressure near-term from poor physical demand and weak energy prices, which tend to prompt cane mills to produce more sugar and less ethanol, a cane-based biofuel.


Broker ADMIS noted, however, the tight global supply picture has not gone away, with top grower Brazil's production sharply lower this year due to excess El Niño-linked rains.

Sugar production in Brazil's key center-south region fell 0.7% in the second half of October from a year earlier to 2.08 million metric tons, according to data released by the Agriculture Ministry.

White sugar fell 0.3% to $509.90 a metric ton.

Coffee

Arabica coffee settled up 9.9 cents, or 3.7%, at $2.7455 per lb, rebounding from a six-week low of $2.6215 hit on Wednesday. Dealers said there were some supportive factors behind Thursday's surge, such as the rolling over of positions from December to March before first notice day and the poor passing rate for Brazilian coffee that was sent to ICE warehouses for grading.

ICE said on Wednesday that 7,120 bags of Brazilian coffee failed grading and none was approved. That improved on Thursday, making it a 59% passing rate for the week so far.

Any upside on coffee, however, might be limited by the good flow of beans to consumers.

Top grower Brazil exported 5.02 million bags of green coffee in October, a nearly 31% year-on-year rise.

Robusta coffee slipped 1.2% to $3,207 a ton.

"Coffee-growing areas have seen only light rain, which has not disrupted harvesting," said a trader in top grower Vietnam.

Cocoa

London cocoa settled up 94 pounds, or 2.4%, to 3,986 pounds per ton, having hit a four-month low of £3,675 on Tuesday. Weak demand for chocolate is weighing on cocoa, as is the relentless rise in exchange stocks to 2-1/2-year highs.

The El Niño weather pattern remains a risk for cocoa, however.

The US Climate Prediction Center said on Thursday it sees a greater than 79% chance that a strong-to-very strong El Niño will continue through January to March 2027.