London: ICE raw sugarNSE 0.00 % prices hit a fresh nine-month peak on Monday as bullish technical signals prompted more fund short covering, while arabica coffee steadied after its recent price surge. March raw sugar was up 0.11 cents, or 0.8 per cent, at 13.29 cents per lb at 1223 GMT, having hit 13.33 cents, the highest since late February.

ICE raw sugar speculators trimmed their net short position by 14,954 contracts to 103,432 in the week ended December 3, CFTC data showed. “What happens next depends on the funds and they tend to follow technical indicators which currently remain bullish,” said Marex Spectron in a note.

It added the current rally is coinciding with tightening spreads and rising cash prices, both bullish signals. Longer term, however, sugar is capped by the ethanol parity, which Marex expects will be around 13.00-13.50 next year.

March white sugar rose $4.00, or 1.2 per cent, to $351.50 a tonne, having hit its highest since late February at $351.90. March arabica coffee rose 3.3 cents, or 2.6 per cent, to $1.2815 per lb, having hit $1.2840, its highest since October last year.

ICE arabica coffee speculators trimmed their net short position by 6,637 contracts to 956 in the week ended December 3.

ICE-certified stocks have fallen from 2.5 million bags in March to around 2.1 million, boosting coffee. Commerzbank said the International Coffee Organisation forecast of a 502,000 tonne deficit, while not large considering last season’s 3.7 million tonne surplus, has likely driven the recent price surge.

It added, however, that prices should be capped given the 2020/21 crop in top producer Brazil could hit another record.

Colombia has laid out a road map to guarantee sustainable coffee production, with plans to increase quality and output.