Sugar gains ground as arabica coffee lowers

New York/London Raw sugar futures extended their rebound on Friday on short-covering following several days of heavy selling and on expectations consumer demand may pick up after prices tumbled to a one-year low this week.

Arabica coffee weakened further to finish at a 19-month low, while cocoa ended down in light business.

ICE July raw sugar rose 0.16 cent to close at 20.81 cents per pound, having rebounded from near a year low it had hit on Wednesday. London August white sugar added $6.30, or 1.1 per cent, to close at $566.10 per tonne.

"The market's oversold," said Alex Oliveira, senior sugar analyst at brokerage Newedge USA, adding that sugar had been expected to rebound after several days of selling.

Nick Penney of brokerage Sucden Financial said a weaker Brazilian real and Indian rupee against the dollar had put a cap on values as producers hedged positions.

The millstone around sugar's neck is bumper supplies.

The 2011-12 world sugar surplus could stand at above 6 million tonnes, up from a 5.2-million-tonne surplus as projected in February, preliminary figures from the International Sugar Organisation showed.

Cocoa settled easier in New York and London.

Coffee futures traded mixed, with arabicas down and robusta futures climbing. July arabicas on ICE fell 1.20 cents to close at $1.746 per pound, the lowest settlement for the second-position contract since October 2010.

London July robusta coffee was up $44, or 2.23 per cent, to settle at $2,019 per tonne.