January 06, 2015
Business Recorder | Reuters
LONDON/NEW YORK: Raw sugar futures on Tuesday rallied on fund and speculator buying from the prior session's three-month low, briefly triggering automatic trading curbs.
Arabica coffee on ICE jumped in a technically driven correction after touching a 5-1/2 month low on Monday, and was fuelled by forecasts of below-normal rainfall in Brazil.
New York cocoa futures eased, under pressure from a firmer dollar against a basket of currencies.
Raw sugar futures jumped sharply, triggering automatic trading curbs in the market, a spokeswoman for the ICE exchange said.
The price of sugar rose from 14.46 cents a lb at 0849:51 local time (1349:51 GMT) to 15.06 cents a lb at 0849:59 local. This triggered an interval price limit (IPL) circuit breaker, which in the sugar No. 11 contract automatically comes into effect when the price moves 60 cents or more in 15 seconds.
The IPL results in a 30-second trading curb, during which trading cannot continue outside of that set price band, but may continue within it.
Traders said the sudden spike was largely the result of buy-stop orders in place around 14.50 cents a lb, rather than an execution error such as a "fat finger" order.
"We did have a fair amount of index funds and their followers, mostly long-only funds, come in and buy the market early," said Phil Pia, a desk broker at Societe Generale in New York, noting that Monday's gains and settlement price sent positive chart signals.
"They got the flat price above 14.50 cents a lb and then it just sent off cascading buy stops," he added.
Front-month raw sugar was up 0.59 cent, or 4.1 percent, to 14.85 cents a lb at 1539 GMT, having fallen on Monday to 14.07 cents, a three-month low basis front month.
March white sugar traded up $8.40, or 2.2 percent, to $388.90 per tonne.
The front-month March arabica coffee contract rallied 5.7 cents, or 3.4 percent, to $1.7380 cents a lb on chart-based buying.
The second-month, May arabica contract rose 5.7 cents or 3.3 percent to $1.7645 per lb.
On Monday, the spot contract fell to $1.6010, the lowest level since mid-July.
Traders said the rise in arabicas was driven by concern about forecasts for below-normal rainfall in the first half of January in top grower Brazil.
March robusta coffee rose $36, or 1.9 percent, to $1,947 per tonne.
New York March cocoa traded down $28, or 1 percent, at $2,916 per tonne, under pressure from the stronger dollar.
London May cocoa was down 5 pounds, or 0.3 percent, at 1,975 pounds per tonne.
Reference link: http://www.brecorder.com/markets/commodities/europe/215283.html