Raw sugar futures sprang to a four-month peak on Monday on fund and investor buying as players turned their focus into the upcoming delivery for the spot March contract when it goes off the board on Wednesday.
New York's March raw sugar contract climbed 0.31 cent to close at 26.50 cents per lb, just below the session peak at 26.69 cents, which is the highest intraday level for the spot contract since October 28, 2011.
London's May white sugar increased $9.70 to conclude at $671.10 per tonne.
"People are rolling out of March and we could see a noticeable drop in open interest," said Country Hedging Inc senior analyst Sterling Smith.
Dealers said the sugar front-month premium indicated potential for a large delivery against expiry of the March ICE raw contract on February 29.
But Smith and other sugar brokers pointed to the fact that ICE Futures US data showed open interest in the previous two sessions in the March raw sugar contract has dropped over 24,000 lots.
Open interest as of Friday stood at 40,537 lots.
"We could drop 30,000 in the next three days so the amount of deliveries remains fluid," a dealer for a brokerage house said.
London-based brokers said the delivery, likely to go to a sole receiver, was expected to stand at between 500,000 and 1 million tonnes.
Brokers said the sugar will probably come from the smaller north-east crop of leading producer Brazil, Thailand and Central America.
Logistical constraints may prune the amount of sugar from Thailand, while Central American sugar exporters could move their sugar to the US and Mexico, where tightly supplied markets could fetch them higher prices.
Smith said sugar is trading at the upper end of its trading range, and other analysts said the overbought market is vulnerable to a setback.
"We're vulnerable to the risk of a correction (down)," said James Kirkup, head of sugar brokerage at ABN Amro Markets.
Market participants kept a close watch on the front-month robusta premium in the London coffee market, which has seen sharp volatility in recent weeks.
The market was focused on the extent of origin selling from top producer Vietnam, with a risk the front-month premium could widen again in the next few weeks, said Andrea Thompson, analyst with CoffeeNetwork, a subsidiary of INTL FCStone.
London's May robusta futures fell $44 to end at $2,012 a tonne.
New York's May arabica rose 1 cent to finish at $2.046 per lb.
Arabica coffee futures on ICE edged up, with upside capped by the firmer dollar.
"The dollar is weighing - there is general commodity selling, with oil going down," Thompson said.
Cocoa futures moved higher, sweeping past a topside barrier to enable New York bean values to trade over $2,400 per tonne.
New York's May cocoa futures added $43, or 1.8 percent, to finish at $2,400 a tonne, down from a session peak at $2,443.
Prices were underpinned by recent tight arrivals of beans in West Africa.
The firmer dollar limited upside potential.
London May cocoa increased 29 pounds, or almost 2 percent, to finish at 1,542 pounds per tonne.