Cotton, Raw Sugar Gain on Supply Concerns; Cocoa Tumbles

Alexandra Wexler

  NEW YORK - Cotton prices rose to a six-week high Thursday on concerns that

poor growing weather would hamper the U.S. crop.

  Raw-sugar futures eked out a fresh 6 1/2-month high on continued supply

concerns, while cocoa prices fell to a one-week low.

  Cotton for delivery in December ended 0.7% higher at 87.44 cents a pound, a

six-week high, as supply concerns also buoyed that market.

  The U.S., the No. 1 exporter and No. 3 producer of the fiber, has been

suffering from poor weather conditions in its top-producing states, which

delayed the planting of the fiber and, subsequently, the development of the

crop.

  Tropical Storm Karen is forecast to dump rain on No. 2 cotton-growing state

Georgia on Sunday and Monday, which could damage open cotton bolls and reduce

supplies, analysts said.

  "It's hitting (the crop) right as they're pulling it out," said John Payne,

market strategist at Daniels Trading in Chicago. He expects the market to climb

until it runs into resistance at 90 cents a pound.

  "Without any USDA info (due to the shutdown), you're essentially trading on

rumors and weather," Mr. Payne added.

  Raw sugar for March delivery on the ICE Futures U.S. exchange ended 0.1%

higher at 18.52 cents a pound Thursday, the highest settlement since March 15.

  The harvest in Brazil, the No. 1 producer and exporter of the sweetener, is

being delayed by wet weather, fueling concerns that supplies will tighten.

  Rains delay the crop because heavy harvesting and transporting equipment

can't enter the sugar-cane fields when they are soggy. In addition, the longer

the rains delay the harvest, the further back it gets pushed, which leaves the

cane more vulnerable to cold, wet seasonal weather.

  Already this week, the Brazilian Sugar Cane Industry Association, or Unica,

trimmed its forecast for the country's center-south region's cane harvest by

0.4% from its previous forecast to 587 million metric tons this season. The

center-south produces about 90% of Brazil's sugar cane.

  The lower output estimates "provide a fundamental reason to buy," said Jack

Scoville, vice president at Price Futures Group in Chicago. "Traders also note

the increased potential for more crop losses in Brazil... due to rains in the

forecast for this week."

  ICE cocoa futures, on the other hand, tumbled below the key technical and

psychological level of $2,600 a ton Thursday, ending 1.8% lower at $2,585 a

ton, a one-week low.

  An early dip below $2,625 a ton triggered sell-stops, or preplaced orders to

sell when prices touch a certain level, sending prices cascading to $2,561 a

ton before bargain hunters boosted the market.

  "Looks like a large stop drove it down and that triggered more selling before

buying came in and brought it back up," said Michael Kerensky, assistant vice

president at RJO Futures in New York.

  Traders said the record net-long position that speculators have in the cocoa

market continues to make it vulnerable to long-liquidation.

  But market participants remain concerned that recent dry weather in West

Africa has hurt the quantity and quality of the region's main cocoa crop. West

Africa is the source of about 70% of the world's cocoa.

  Demand for cocoa beans is also high ahead of the holiday season. U.S.

warehouse stockpiles are at their lowest level since Feb. 26, and are down 5.7%

from a year ago.

  Orange juice for delivery in November settled 1.3% lower at $1.2585 a pound,

the lowest close since Sept. 20. Tropical Storm Karen, the only weather system

currently in the Caribbean, is forecast to miss Florida's orange-growing areas

entirely, leaving the market with little news to trade on.

  Arabica coffee for delivery in December edged to $1.1535 a pound, up 0.8%.