Soft futures mixed, sugar eases off four-week high

Soft futures were mixed on Monday with cotton and cocoa advancing, while coffee fell and sugar eased off a four-week high.

On the ICE Futures U.S. Exchange, raw sugar for October delivery traded at $0.1691 a pound at 12:56 GMT, down 0.24% on the day. Futures held in range between days low at $0.1688 and $0.1698 a pound, the highest level since July 1. The sweetener surged 3.04% on Monday and extended current weeks advance to 2.7% gaining 2.4% in the previous two weeks.

Raw sugar gained on Monday and Tuesday as frost may damage the crop in Brazil and cut supply, while speculation arose demand may increase.

Last week, temperatures fell below zero in some of Brazils sugar cane-, coffee, corn- and wheat-growing areas in the states of Parana, Santa Catarina and Mato Grosso do Sul. Frost was also seen in Argentinas main cane growing area, Tucuman, which is expected to cut production.

Tom McNeill, a director at Green Pool, said for Bloomberg: “A stronger line-up from center south Brazil, combined with a frost scare across Argentina and southern Brazil, seemed to convince participants that sugar off-take is robust at these lower prices. Our major worry is that much of that demand is being driven by China, which is building stocks at a high rate of knots. India recently reshaped raws demand by imposing a small duty change –- will China follow suit?”

Possible supply disruptions come at a time of increasing demand by China. Due to a Chinese government policy to stockpile domestic-produced sweetener, local prices are increasing above the international level, which results in increased imports. Outbound shipments from Brazils biggest ports on July 24 were supposed to transport 1.7 million tons of sugar, up from 1.33 million a week earlier. Exports to China were supposed to be three times higher than the previous week. According to oby Cohen, a director at London-based Czarnikow, imports of raw sugar into China may exceed 3 million tons this season, 500,000 tons more than an April estimate.

Cotton advances

Elsewhere on the market, cotton advanced to $0.8478 a pound at 12:58 GMT, up 0.08% on the day. The December contract ranged between days high and low of $0.8522 and $0.8466 a pound respectively. The fiber fell 0.47% on Thursday and is so far marking a 0.4% weekly decline after tumbling 0.97% the previous week.

In its weekly crop progress report on Monday, the USDA said cotton squaring advanced from last weeks 77% to 89%, but remained below last years 93% and the five-year average reading of 90%.

As for the cotton condition, it was overall better than the previous weeks and fairly unchanged compared to last year. The U.S. Department of Agriculture said that as of July 28, 22% of the cotton crop was rated very poor-poor compared to 22% a year earlier. Meanwhile, 33% of cotton was categorized as “Fair”, 1% lower than in 2012. As for the premium quality, 45% fell in the “Good” and “Excellent” categories, compared to 44% the same week last year.

Elsewhere on the ICE U.S., arabica September futures fell to $1.2083 a pound at 12:56 GMT, down 0.12% on the day. Meanwhile, cocoa for the same month delivery stood at $2 305 a ton, up 1.52% on the day.

On the NYSE Liffe in London, cocoa for September delivery surged to GBP1 559 a ton at 12:57 GMT, up 1.10% on the day. Robusta September futures traded at $1 886 a ton, marking a 0.63% daily loss.