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Raw sugar rises sharply as commodity markets rebound

LONDON - Raw sugar futures moved higher on Tuesday, rebounding strongly from the previous session's seven-year low as China's decision to cut interest rates buoyed equity and commodity markets.

LONDON - Raw sugar futures moved higher on Tuesday, rebounding strongly from the previous session's seven-year low as China's decision to cut interest rates buoyed equity and commodity markets.

Arabica coffee and cocoa futures also advanced.

Dealers said the sugar market had held up comparatively well during Monday's broad-based commodities sell-off, citing a boost to sentiment from an improving outlook on fundamentals, with the first global deficit for several seasons expected in 2015/16.

"I think it was able to sustain its current levels relatively well in the midst of tremendous macro pressure. Today what I think we're seeing is a bit of opportunistic buying coming off the lows," Rabobank analyst Tracey Allen said.

October raw sugar on ICE was up 3.2 percent at 10.71 cents a lb at 1246 GMT. The front month had fallen to a seven-year low of 10.13 cents on Monday.

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Concern that the El Nino weather phenomenon could curb sugar production, particularly in Thailandand India, remains a background factor supporting prices.

Allen noted the impact of El Nino should start to become clearer in the September-October period.

"We would expect there to be more volatile trading during that period. The fourth quarter becomes quite interesting," she added.

White sugar futures also advanced, with October up 3.2 percent at $344.10 a ton, pulling further away from last week's 6-1/2 year low of $329.

Arabica coffee futures showed more modest gains, with the market boosted partly by industry buying.

"I don't think they are willing to chase the market up very far, but they are certainly willing to extend some coverage on the paper (futures) side if we get down to levels we haven't seen before. And that's exactly where we are right now," one analyst said.

December arabica coffee rose 0.5 percent to $1.2230 per lb, edging away from a contract low of $1.21 set on Monday.

November robusta coffee was unchanged at $1,627 a ton.

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Cocoa futures were higher, with December New York up $49, or 1.6 percent, at $3,137 a ton.

Dealers continued to keep a close watch on conditions in top grower Ivory Coast ahead of the main crop season, which starts Oct. 1.

Light rains in the past week in most of Ivory Coast's main cocoa-growing regions boosted hopes for a healthy main crop but overcast skies could reduce the size of the early harvest, farmers said on Monday.

 

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