* India demand outlook, weak dollar underpin sugar futures
* Cocoa market focused on W. Africa main crop prospects
(Adds trade comment, updates prices)
By David Brough and Sharon Lindores
LONDON, July 31 (Reuters) - Raw sugar fell below 3-year highs on Friday as traders squared positions at month-end with further losses prevented by Indian demand prospects and a weakening dollar.
Sugar futures have rallied on expectations of resurgent demand by top consumer India after a poor domestic harvest.
A weak and erratic monsoon has tightened the Indian output outlook for next season, and expectations of disappointing yields in the centre-south of top grower Brazil have underpinned prices.
News that India has extended a duty-free sugar import regime added to bullish sentiment as it signalled more Indian buying.
"India has now confirmed extensions to the scheme to allow duty-free imports, but before anyone gets too excited, we would have to see internal prices rise sharply, as well as climbing above the world market price," David Sadler wrote in a daily market report for broker Sucden.
Sergey Gudoshnikov, a senior economist with the International Sugar Organization (ISO), said, "Indians have to have parity prices (between domestic and international markets) for imports, but this is not the case."
"For the time being the world price is higher than the domestic price in India. It is a cat and mouse game between different forces," he added.
Gudoshnikov said India could import as much as 5 million tonnes of sugar in 2009/10. European trade sources estimate India will import some 2.5-3.0 million tonnes in 2008/09. "I don't think 5 million tonnes is out of the question (in 2009/10)," Gudoshnikov told Reuters.
INDIA SCHEME
India has extended its scheme to allow duty-free raw sugar imports until March and white sugar imports up to November, Farm Minister Sharad Pawar said on Friday, confirming what sources said earlier this week. [ID:nDEL393131]
ICE October raw sugar futures SBV9 extended earlier losses, falling 0.25 cent to 18.50 cents a lb at 1450 GMT, below a three-year peak of 18.91 cents touched earlier this week.
Dealers see a wall of resistance around 19 cents, and then around 19.70. Raw sugar hit a 25-year high of 19.73 cents in February 2006.
London December white sugar futures LSUZ9 were down $5.70 to $488.10 per tonne in low volume of 96 lots, having earlier hit a contract high of $495.00 per tonne.
Coffee futures rose in New York on the weakening dollar after second-quarter GDP data from the United States, traders said.
"The dollar provides very good support," a London-based trader said.
"Looking at it (market) from a very technical point of view, it's doing very well," the trader said. "I think it will go up on technicals."
New York's September arabica contract KCU9 rose 2.60 cent to $1.2755 per lb at 1458 GMT. London's September robusta futures LRCU9 rose $9 to $1,499 per tonne.
Rains falling across main coffee areas in world top producer Brazil may have been brief but the harm they have caused to crop quality could stretch into the larger harvest expected next year. [ID:nN29161464]
Cocoa futures fell and were seen consolidating, a trader said.
"At the moment, it's just following everything else, other things are down as well," he said.
Traders are focused on West African mid crop supplies and are gauging prospects for the main crops amid concerns over a lack of agricultural investment in top grower Ivory Coast.
New York's September cocoa futures CCU9 fell $10 to $2,888 per tonne. London's December cocoa contract LCCZ9 was down 14 pounds at 1,841 pounds per tonne.
Some quantity of Malaysian cocoa powder changed hands for prompt shipment but the butter trade slowed to a trickle, with London futures holding near their strongest in more than three months, dealers said on Friday.
No comments:
Post a Comment