LONDON: Raw sugar futures on ICE slipped on Friday as a short-covering rally that lifted prices to four-week highs in the previous session ran out of steam.

Meanwhile a weaker dollar boosted New York cocoa prices to above key technical levels.

October raw sugar was down 0.25 cents, or 1.7 percent, at 14.15 cents per lb by 1328 GMT, having hit a session low of 14.08 cents.

Prices rallied nearly 4 percent a day earlier, boosted by fund short-covering and a move by Brazil’s Petrobras to raise gasoline prices, which is expected to make ethanol more competitive.

However, support waned on Thursday as short-covering petered out and producer hedging dampened gains, dealers said.

“That it has failed to make headway through recent highs comes as a bit of a disappointment for the bulls,” said Nick Penney, senior trader at Sucden Financial. “Producers continue to sell to cover export requirements.”

Focus also shifted back to the looming global surplus next season, with dealers closely monitoring spread movements ahead of the October expiry at the end of this month.

October white sugar fell $8.60, or 2.2 percent, to $378.30 a tonne. The focus was on the European Union, where production is expected to rise sharply in the season starting October.

December New York cocoa rose $16, or 0.8 percent, to $1,942 a tonne, after hitting a session high of $1,972.

Dealers said a weaker dollar provided some support and helped prices move above the short-term moving averages, triggering a bout of technical buying.

However, dealers said thin volumes suggested market participants were reluctant, as ample global supplies remained in focus.

“People still have to make up their minds on how the crop is going to develop and we won’t get a better idea until we’re well into September,” said one dealer. “The market is nervous and hence the volumes have dropped off.”

Dealers were also awaiting fresh exchange data, due out later today, with expectations that funds have reinstated some of the short positions they had previously covered.

December London cocoa was down by two pounds a tonne, or 0.1 percent, at 1,520 pounds a tonne.

November robusta coffee was unchanged at $2,069 a tonne.

Dealers were monitoring the September expiry after open interest dropped by a sizeable 2,949 lots on Thursday.

December arabica coffee rose 0.60 cents, or 0.5 percent, to $1.2995 per lb.—Reuters