Sugar bounces as jitters linger after selloff

"We're waiting to see where we go from here," said Larry Young, an analyst for brokerage Infinity Futures in Chicago, adding there is a tone of indecisiveness in the softs complex.

    "Commodity prices are corks on an ocean at the moment," VM Group analyst Gary Mead, who pointed out that upheaval in financial markets linked to euro zone sovereign debt was a more important influence on sugar at the moment than its own supply and demand picture.

    New York's March raw sugar contract <SBH0> increased 0.43 cent to settle at 26.60 cents a lb.

London's March white sugar contract <LSUH0> gained $13.50  to conclude at $738.00 per

tonne.

    Last Monday, raw sugar hit a 29-year peak at 30.40 cents, then slid 12 percent during the week to close at a 6-week low of 26.17 cents on Friday.

    "It is a tentative rebound after the brutality we saw in the last few days. We got caught up in the reverberations going around the global economy," said Rabobank soft commodity trader Nick Hungate.

    Dealers said sugar market fundamentals remained constructive with estimates emerging from a sugar conference in Dubai that confirmed expectations for a large global shortfall in 2009/10.

    Consultancy Kingsman SA raised its forecast for the 2009/10 deficit to 11.92 million tonnes from 8.3 million, but projected a surplus of 3.99 million in 2010/11. [ID:nSGE61707M]    

    Analysts said the outlook for 2010/11 hinged on whether India and Brazil are able to raise production significantly following disappointing crops in 2009/10.

    "If we get more monsoon problems in India and the crop fails to deliver the promised improvement, we are likely to see significantly higher prices," Hungate said.

    COMMERCIAL BUYING BUOYS COFFEE AND COCOA

    Cocoa futures were firm as the market looked to consolidate after a sharp decline last week. Dealers said industry buying had helped to underpin the market.

    In top cocoa producer Ivory Coast, port arrivals of beans from the growing areas continued to slow, providing some support for the market.

    They were estimated at around 16,000 tonnes Feb. 1 and 7, down from 31,981 tonnes in the same week a year ago.

[ID:nCOC832487]

    New York's May cocoa contract <CCK0> climbed $53 to settle at $3,054 per tonne.

London's May cocoa <LCCK0> gained 15 pounds to close at 2,214 pounds a tonne.

    New York's March arabica coffee futures <KCH0> gained 2.15 cents to end at $1.3065 per lb. The May robusta contract <LRCK0> in London finished flat at $1,330 per tonne, having earlier touched a contract low of $1,310.

Source : Reuters