Soft futures mixed, sugar rebounds

Soft futures were mixed on Thursday with cotton and cocoa marking daily losses, while sugar and arabica coffee gained. Sugar rebounded after prices fell to a three-year low of $0.1617 on Thursday as farmers in Brazil started to accelerate harvesting. Investors started buying sugar futures after bearish bets reached a record and the worlds top producer, Brazil, used more cane to make ethanol instead of the sweetener.

On the ICE Futures U.S. Exchange, sugar futures for July delivery traded at $16.77 a pound at 13:19 GMT, up 0.09% on the day. Earlier during the session prices rose by 1% to a daily high of $0.1693, the highest level since May 28. Prices rose by 3% on Friday as hedge funds and institutional investors covered short positions and news came out that higher ethanol prices in Brazil will make millers use more cane to make the biofuel. Millers in the country’s main growing region, center south, used 58% of the processed cane to make ethanol instead of sugar, up form 52% compared to last year. Brazil accounts for 20% of global sugar production and 39% of the sweetener’s export.

Kingsman SA, a unit of McGraw-Hill Financial Inc. (MHFI)’s Platts, said in a report: “The rally was partly explained as a late reaction to the Unica figures. We may have seen a temporary bottom, but it is too early to say whether it becomes more than that. The funds, however, are very short and once they start short-covering their buying may snowball.”

Elsewhere on the market, arabica coffee for September delivery traded at $1.2408 a pound, marking a 0.22% gain for the day. Prices varied between daily high and low at $1.2478 and $1.2345 per pound. Coffee prices fell to a three-year low of $1.2117 a pound on June 12 as concerns over ample global supply drove prices down.

Robusta coffee was trading last week near its 17-month low level as favorable conditions in Indonesia and Vietnam, its biggest grower, supported developing. According to the International Coffee Organisation, the 2012-2013 arabica production in most countries will jump 5.7%, and robusta output will jump by 8.8%.

Meanwhile, cotton futures for December delivery stood at $0.8837 a pound, down 1.20% for the day, ranging between days high and low at $0.8895 and $0.8739 a pound respectively. On Wednesday, the U.S. Department of Agriculture trimmed its cotton crop forecast by 3.6% to 13.5 million bales, compared to its previous estimate of 14 million bales. Cotton gained 13% this year as global production is expected to slip 4.8% in the season starting August 1, while demand will increase by 2.3%, according to the International Cotton Advisory Committee.

Cocoa marks yet another daily loss and traded at $2 221.50 a ton at 13:17 GMT, down 1.29% on the day. Priced ranged between days high at $2 252.50 and low of $2 215.50 respectively.