“There are some concerns about deliverable supplies,” Arthur Liming, a futures specialist at Citigroup Inc. In Chicago, said in a report e-mailed yesterday. There are “concerns that deliveries from Thailand and Mexico will be lighter than expected.”

Eoin Treacy's view The spread between White Sugar's 1 st and 2 nd month contracts spent much of the last three years in backwardation but became progressively tighter from 2011 and dropped into a contango last October. This flattening of the forwards curve coincided with a consistent downtrend on the front month contract which has been characterised by a progression of lower rally highs.

The fact that prices have moved back into an expanding backwardation suggests that the potential for prices to break successfully back above the 200-day MA on a sustained basis have improved. However a move above $540 will be required to confirm a return to demand dominance beyond the short term.

New York listed Sugar has also been trending lower for more than two years but has steadied of late and is now challenging the progression of lower rally highs.