* Sugar rally temporarily runs out of steam
* Robusta coffee futures seen oversold
(Adds fresh quotes, background, updates prices)
By Nigel Hunt and Sharon Lindores
LONDON, July 3 (Reuters) - White sugar futures fell on
Friday in a modest pullback from a three-year peak set earlier
this week, dealers said.
Robusta coffee prices edged higher and cocoa remained little
changed in thin volumes due to the closure of U.S. markets for
the Independence Day holiday.
"There are an increasing number of indicators signalling
that the upward potential for sugar has been exhausted for the
time being and a price correction is imminent," Commerzbank said
in a report on Friday.
"The sugar price has reached a level that could have a
dampening effect on imports," the report added.
London August white sugar futures were down $5.30 at $445.00
per tonne at 1434 GMT. The contract rose as high as $465.20 on
Wednesday, a three-year peak for the front month.
The run-up in prices has been driven partly by expected
demand from India, the world's top consumer, following a sharp
drop in domestic production.
"We remain firmly bullish on the outlook for sugar," analyst
Kona Haque of Macquarie Bank said in a report on Friday, adding
world prices could rise above the 20 cent per lb mark.
October raw sugar prices on ICE settled at 17.58 cents a lb
on Thursday.
LOW STOCKS
"India has so far made little impact on the international
market due to government-assisted low domestic prices versus
that of imports, while being forced to draw down domestic
stocks," she said.
"However, by October, these stocks will have reached too low
levels, causing Indian sugar prices to rise and thus forcing in
the much-needed imports."
India is considering allowing private traders to import
tax-free white sugar and extending permission to let mills
import raws at zero duty beyond July, a senior government
official said on Friday.
Robusta coffee futures saw some industry buying in light
volumes, a coffee trader said.
London's September robusta contract rose $6 to
$1,329 per tonne.
"There's been a lot of activity on the downside recently,"
the trader said, adding that he thinks robustas are oversold
after falling sharply during the last month.
Cocoa futures were little changed.
Dealers said the market was deriving some support from talk
of a possible supply tightness for the September contract with
its discount to December narrowing to about five pounds from
nine pounds at the close on Thursday.
London September cocoa stood two pounds lower at 1,599
pounds per tonne.
Cocoa arrivals at ports in top grower Ivory Coast reached
1,058,192 tonnes by June 30, down from 1,248,676 tonnes in the
same period a year ago, according to data from exporters
obtained by Reuters on Friday.
(Additional reporting by David Brough; Editing by Anthony
Barker)
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