LONDON: Raw sugar futures rallied 2 percent to hit a 3-1/2-year peak and arabica coffee futures extended gains on Wednesday, supported by a stronger currency in top grower Brazil.

Cocoa prices were little changed as the British pound bounced off a 31-year low it hit on Monday after tumbling when Britain voted to leave the EU.

Raw sugar futures traded on the ICE surged, supported by the strengthening of the Brazilian real to an 11-month peak this week.

The strong real discourages Brazilian producer selling of dollar-denominated coffee and sugar.

“Tomorrow is month and quarter end, with the likelihood that fund managers will want a buoyant close, not only in sugar, but across the commodity spectrum,” a senior broker said.

“If the recent highs do hold then some may start to question the market’s ability to push higher without a correction given the huge fund net long position.”

Nick Penney of Sucden Financial Sugar said: “The Brazilian real is very strong against the dollar, which dissuades hedgers from adding to shorts.”

The July/October spread was little changed at a discount of around 0.14 cent ahead of the July contract’s expiry on Thursday.

Dealers spoke of expectations of a large delivery, possibly over 1 million tonnes, of mainly Brazilian sugar.

October raw sugar was up 0.57 cent, or 2.9 percent, at 20.53 cents per lb at 1308 GMT, after touching 20.58 cents a lb, the highest since October 2012 for the second month contract.

August white sugar was up $11.30, or 2.1 percent, at $559.40 per tonne, a contract high.

Arabica futures extended gains after Tuesday’s rally, supported by the firmer real as well as concerns over the quality of arabica beans in the current harvest in Brazil.

Commerzbank said in a note that the strengthening real had contributed to the 4 percent surge in arabica on Tuesday.

September arabica was up 3.3 cent, or 2.35 percent, at $1.4390 per lb.

September robusta was up $19, or 1.1 percent, at $1,720 per tonne, underpinned by expectations that Vietnamese robusta exports could slow down.

Dry weather in producers such as Vietnam, Indonesia and India has eroded supply prospects for next season.

London September cocoa eased 20 pounds, or 0.85 percent, to 2,344 pounds per tonne, just below Tuesday’s peak of 2,374 pounds, the highest for the second position since March 2011. New York September cocoa was up $5, or 0.2 percent, at $3,011 per tonne.—Reuters