Soft futures mixed - Sugar bounces off 2-1/2-year low, coffee declines

Investing.com - U.S. soft futures were mixed during U.S. morning trade on Monday, with sugar prices bouncing off the lowest level since August 2010 as market players closed out bets that prices would fall further after futures moved into oversold territory.

On the ICE Futures U.S. Exchange, sugar futures for March delivery traded at USD0.1825 a pound, up 0.5% on the day. The March contract rose by as much as 0.7% earlier in the day to hit a session high of USD0.1829 a pound.

The sweetener fell to USD0.1803 a pound on February 8, the lowest level since August 2010.

Sugar prices regained strength amid speculation millers in Brazil will direct more cane to making ethanol at the expense of the sweetener.

Last week, Brazil’s government set policies that could divert sugar cane earmarked for production of the sweetener to ethanol fuel, easing concerns over a global supply glut.

Sentiment on the sweetener has been dampened in recent sessions amid concerns over a global surplus of the commodity.

Industry group Sucden do Brasil said last week sugar-cane harvesting in the country’s center south, the main growing region of the world’s largest producer, will start earlier this year because of a record crop.

The South American country is the world’s largest sugar producer and exporter, with the USDA estimating the nation accounts for nearly 20% of global production and 39% of global sugar exports.

Meanwhile, Arabica coffee for March delivery traded at USD1.4072 a pound, down 0.8% on the day. The March contract fell by as much as 0.8% earlier in the session to hit a daily low of USD1.4072 a pound, the weakest level since June 2010.

Coffee prices have been under heavy selling pressure in recent weeks as traders worried over ample global supplies and speculators pushed prices lower.

Output in Colombia, the biggest producer of mild washed Arabica in Latin America, increased 64% in January to 877,000 60-kilogram bags, the Colombian Federation of Coffee Growers said last week.

The country's coffee output rose 9% in the 12 months ended in January to 8.09 million bags, the federation said in a statement.

Elsewhere, cotton futures for March delivery traded at USD0.8289 a pound, up 0.2% on the day. The March contract rose by as much as 1% earlier to hit a session high of USD0.8333 a pound, the strongest level since February 1.

Cotton prices extended strong gains from the recent session after the U.S. Department of Agriculture boosted its forecast of imports by China, the world’s largest user.

According to the USDA, China will import 14 million bales in the year ending July 31, 12% higher than the 12.5 million forecast in January.

The agency also left its estimate for the U.S. cotton crop unchanged at 17.01 million bales in the harvest that started late last year.

Cotton futures rallied to an eight-month high of USD0.8394 a pound on January 24, amid indications of strong demand from top consumer China and concerns over U.S. supplies.