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Soft futures mixed, sugar at a 3-week high

sugar-cubesSoft futures were mixed on Monday with cotton, cocoa and robusta falling, while arabica surged and sugar hit a three-week high as cold weather in Brazil threatened to damage the crop.

On the ICE Futures U.S. Exchange, sugar futures for October delivery traded at $0.1638 a pound at 13:50 GMT, up 0.55% on the day. Prices ranged between days high and low of $0.1648 and $0.1630 a pound respectively. The sweetener surged in four out of five days last week and settled the week 1.31% higher after plunging almost 5% the preceding two.

Sugar extended last weeks gains as Brazilian industry group Datagro said rains in the center-south region, which accounts for nearly 90% of the countrys sugar cane output, are reducing the crops potential to yield sugar.

The sweetener hit a three-year low of $0.1594 a pound on Tuesday but rebounded after Unica trimmed its crop output forecast. Meanwhile, Indonesia, the world’s second biggest importer, may purchase 16% more raw sugar this year in order to meet rising domestic consumption.

Arabica gains

Meanwhile, arabica gained as temperatures in key growing areas are expected to fall below zero this week, potentially inflicting frost damage to the crop. On the ICE, arabica for September delivery traded at $1.2320 a pound at 13:51 GMT, up 0.31% on the day. Prices ranged between days high and low of $1.2565 and $1.2265 a pound respectively. The C contract settled 3.8% lower on Friday, trimming last weeks advance to little over 3% after it declined 1.33% the preceding one.

Arabica was well supported recently and keeps trading higher as cold weather in growing areas might damage the crop. David Streit, senior lead forecaster at Commodity Weather Group in Bethesda, Maryland, said by phone for Bloomberg that temperatures in the morning of July 24 may fall to minus 2 degrees Celsius in Parana.

Kona Haque, an analyst at Macquarie Group Ltd. in London said for Bloomberg: “We think that Brazilian growers will take advantage of any ensuing rally by selling some of their new crop. This will serve to cap both the extent of the rally as well as the duration of it.”

Meanwhile on the NYSE Liffe in London, robusta September futures traded at $1 949 a ton at 13:52 GMT, down 0.97% on the day. Prices held in range between days high and low of $1 977 and $1 944 a ton respectively. Futures gained in four days out of five last week, settling 5.02% higher.

Elsewhere on the market, cotton futures for December delivery traded at $0.8617 a pound at 13:52 GMT, down 0.01% on the day. Prices shifted between days high and low of $0.8642 and $0.8584 a pound respectively. The fiber rose 1.4% on Friday and settled the week 1.03% higher after falling slightly the previous one.

In its weekly crop progress report last Monday, the USDA said cotton squaring fell behind last year’s pace but made a significant advance from the preceding week. As of July 14, 69% of the crop was squared, up from the previous week’s 51%. This however underperformed last year’s 80% during the comparable week and the five-year average of 75%.

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