SOFTS-ICE sugar at 4-1/2-mth high after huge delivery; cocoa dips

Tue Oct 1, 2013 2:20pm EDT

* Trade digests huge delivery vs ICE sugar expiry

* ICE sugar rises towards 200-day moving average

* Substantial cocoa deficit seen in 2013/14

By Marcy Nicholson and David Brough

NEW YORK/LONDON, Oct 1 (Reuters) - ICE raw sugar futures climbed to a 4-1/2-month high on Tuesday, defying the session's weak trend in other commodities, as the market absorbed the biggest delivery against the October contract expiry in at least 24 years.

Cocoa trading on ICE Futures U.S. and Liffe, as well as robusta coffee, were lower pressured by the weak commodities market. ICE arabica turned up a shade in late dealings after failing to extend losses.

The Thomson Reuters-Jefferies CRB index, a global benchmark for commodities made up of 19 markets, was down about 0.6 percent, at a two-month low as worries that a shutdown of the U.S. government pressured oil, gold and copper.

The U.S. government began a partial shutdown on Tuesday for the first time in 17 years, potentially putting up to 1 million workers on unpaid leave, closing national parks and stalling medical research projects.

ICE March raw sugar futures rose 0.18 cent, or 1 percent, to settle at 18.32 cents a lb, after climbing to 18.38 cents, the highest since May 15 and approaching the 200-day moving average at 18.58 cents. It is one of just a handful of markets on the CRB that traded firm.

ICE October sugar delivery totaled 29,344 lots, or 1.49 million tonnes, the biggest since at least 1989, with Term Commodities, a unit of Louis Dreyfus, as the sole receiver, ICE Futures U.S. data showed.

The market was initially steady as there was no consensus among traders on whether this enormous delivery was bearish or bullish, with many questioning if there was the demand for the mountain of sugar. The firm move later in the session showed traders started to view it with bullish eyes.

One London-based sugar broker said that the big delivery was a bearish signal to the market, questioning why one receiver should take everything and others not want it.

"The tape (expiry) is the home of last resort," he said. "You only put sugar on there if you can't find a buyer."

The broker said the focus would now turn to how quickly vessels are nominated. If vessels were nominated quickly, that could signal strength in the market, and vice versa.

However, some traders said a sole receiver could signal confidence that homes would be found for the sugar.

Thomas Kujawa, co-head of the softs department at brokerage Sucden Financial, said of the huge delivery, ""Is it bullish or bearish?" We have been repeatedly asked and judging that we are unchanged (on price) so far it seems the jury is still out."

December white sugar on Liffe closed up $2.60, or 0.5 percent, at $488.70 a tonne.

ICE December cocoa finished down $6, or 0.2 percent at, $2,634 per tonne. The front month continued to consolidate just below the one-year high at $2,657 on Sept. 19.

"Cocoa is just taking a break as all the news may be built in," said one U.S. dealer.

Dealers said the market could see a short-term setback after its recent run-up but that continued to be underpinned by expectations of a substantial global deficit in 2013/14.

March cocoa on Liffe settled down 12 pounds, or 0.7 percent, at 1,672 pounds a tonne.

Liffe January robusta coffee inched down $7, or 0.4 percent, to close at $1,643 a tonne. The second month slumped to $1,596 on Friday, a three-year low.

Dealers said harvesting in top robusta coffee producer Vietnam should gather pace this week, with analysts generally expecting a large crop.

December arabica coffee futures on ICE rose 0.40 cent, or 0.4 percent, to end at $1.1410 per lb. The front month dipped to $1.1105 on Sept. 17, a more than four-year low.

Referring to the second month arabica contract, Sucden Financial research analyst Kash Kamal said: "Short-term indicators suggest potential for further consolidation lower. On the downside, prices are well supported towards $1.15 while any moves lower could potentially target the $1.05-$1.10 area."

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