:. Food Industry News


Sugar, Coffee Up Sharply, Outlook Uncertain

Source: Reuters
13/10/2008

London, Oct 13 - Sugar, coffee and cocoa futures all rose strongly on Monday, boosted by rallies in commodity, energy and equity markets triggered by new plans to rescue the banking sector and prevent a global recession.

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Dealers said it was much too early to say whether a rebound in soft commodity prices from the steep losses of the last few weeks would be sustained and the outlook depended on the performance of broader financial markets.

"It is the overall market and credit liquidity that needs to loosen up first before we can start making any rational analysis of our markets," said soft commodity trader Steve Jesse of Rabobank.

"The squeeze on liquidity and credit is probably keeping people, who might normally wade into these markets in some style, away," he added.

March raw sugar futures on ICE had risen 0.43 cents or 3.8 percent to 11.66 cents a lb by 1410 GMT. The contract traded as high as 15.85 cents in late August but fell sharply as global economic woes deepened.

"Measures taken by finance officials around the globe have restored some confidence and kept sellers at bay," brokers Sucden said in a daily sugar market report.

"How long this continues remains to be seen but considering the drubbing over the last couple of weeks there is room to the upside," the report said.

December whites in London rose $9.80 a tonne to $336.10 a tonne.

KNEE JERK REACTION

"If the politicians had conjured up enough confidence to prevent a resumption of investor panic selling then sugar has every chance to stage a sharp rally," brokers Fortis said in a market report.

Coffee futures also rebounded from steep losses.

"It's a bit of a knee jerk reaction but I don't think this is going to be the one that brings us back on side. I can still see some scope to the downside," one coffee dealer said.

Arabica futures on ICE were higher with December up 2.15 cents or 1.9 percent at $1.1750 per lb. The contract touched $1.0935 last week, the lowest level for the front month

London's robusta market also climbed with January up $57 or 3.3 percent at $1,808 a tonne.

Cocoa futures were higher, dragged up by gains in other markets.

December cocoa futures on ICE rose $36 or 1.6 percent to $2,280 a tonne.

The contract touched $2,205 a tonne on Friday, the lowest level for the front month since late January.

March cocoa in London climbed three pounds to 1,397 pounds a tonne with gains capped by the strength of sterling.

Sterling extended early gains against the dollar on Monday after Britain's Treasury stepped up efforts to revive its ailing financial sector by injecting capital into the country's biggest banks.



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