Raw sugar futures on ICE hovered above a 3-1/2 year low on Thursday, after the Federal Reserve sent stock markets higher with its plan to start scaling back its bond-buying stimulus .
Cocoa was firm, helped by the positive investor sentiment generated by the Fed decision, but coffee eased.
European shares rallied after the Fed accompanied its decision with a promise to keep record low interest rates in place even longer than previously signalled.
"Sugar is looking for any story to stop the rot and it's grabbed this with both hands," said James Kirkup, head of sugar brokerage at ABN AMRO.
ICE March raw sugar futures held above the previous session's 3-1/2 year low, trading up 0.05 cent or 0.3 percent at 15.94 cents a lb at 1518 GMT. The front-month fell to 15.86 cents on Wednesday, its lowest level since July 2010.
Dealers said it was unlikely the bounce was sustainable given the bearish fundamentals of the sugar market, including expectations that government supports in India could increase the volume of Indian sugar supplies on the world market.
India's cabinet will consider interest-free loans to sugar mills, Farm Minister Sharad Pawar said, to help them pay government-set rates to cane growers at a time when sugar prices have fallen.
"If they're going to be helping the Indian sugar industry to export its surplus onto the world market, it's not going to help the world market in price terms, developments there are not helpful," Kirkup said.
March white sugar on Liffe edged down 30 cents or 0.1 percent to $433.10 per tonne, after dipping to $432.10 on Wednesday, the lowest level for the front month since May 2010.
The whites-over-raws sugar premium, a measure of refining profitability, has been subdued for months but looks set to rebound as buyers take advantage of multi-year price lows.
LARGE CROP IN VIETNAM
Liffe March robusta coffee eased $19, or 1.1 percent, to $1,680 a tonne with many expecting a large crop in Vietnam will eventually drive prices down.
Robusta coffee prices are expected to slide after being one of the best performing commodities in recent weeks, analysts said.
Dealers said arabica prices had derived support from the strength of the robusta market and now appeared overvalued given more than ample supplies and the prospect of a huge crop in Brazil next year.
"We hold a bearish stance on arabica due to oversupplied fundamentals," Kona Haque, analyst at Macquarie Capital said.
March arabica futures on ICE fell 1.15 cents or 1.0 percent to $1.1480 per lb.
In cocoa, May futures on Liffe traded up 8 pounds, or 0.45 percent, at 1,769 pounds a tonne, remaining stuck inside its recent range of 1,711 pounds to 1,788 pounds, in which it has traded for over a month.
Dealers said the market lacked clear near-term direction.
"The longer-term picture still retains its constructive potential but in the short term we are very much rangebound and trendless," a U.K.-based broker said.
London's structure was in backwardation, meaning nearby contracts traded at premiums to later dated contracts, indicating expectations of tightening supply.
"The structure is a good sign for the future, that's the type of structure that comes along with bull trends," the broker added.
Source:- brecorder.com/markets
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