ICE front-month raw sugar futures rallied almost 3 percent in a short-covering rally and later lost some ground. ICE raw sugar stood up 0.4 cent or 1.5 percent to 27.43 cents a lb in volatile dealings in thin volumes at 1218 GMT.
"The market came down too far and is now having a technical correction because it was oversold," a senior London sugar futures broker said.
The sugar market extended Monday's recovery rally having suffered its biggest 2-day fall in 20 years last week on talk of possible Chinese interest rate rises.
Liffe December white sugar was up $13.60 or 2 percent to $690.70 in modest volume of 1,153 lots. The market awaited details of a delivery against expiry of the Liffe December refined sugar contract on Monday. One dealer said he expected a delivery tonnage of some 200,000-250,000 tonnes of Brazilian and Guatemalan sugars.
ICE raw sugar fell sharply last week after hitting a 30-year top of 33.39 cents a lb on Nov. 11, underpinned by tight export availability from top producers Brazil and India.
Dealers are waiting for a decision from India on how much sugar the world's number 2 producer would export in 2010/11 to help relieve a supply gap before Brazil's next harvest in 2011. Sugar remains underpinned by low global stock levels.
India will only consider freeing up sugar exports after obtaining a credible output estimate, the farm minister said, which could come at the end of this month, according to trade officials.
CURRENCY PRESSURE
Coffee and cocoa futures came under downward pressure due to the strong dollar as concerns about spiralling sovereign debt stemming from Ireland undermined the euro.
"The macroeconomic picture is having an impact on commodities, mainly through currencies. The stronger dollar is weighing on coffee and cocoa," another London-based soft commodities dealer said.
ICE second-month arabica coffee futures fell in modest volumes and drifted further away from a recent 13-1/2 year peak, underpinned by tight supplies.
ICE March arabicas stood at $2.0590 per lb, down 1.35 cent or 0.7 percent at 1221 GMT, below the 13-1/2-year high of $2.2145 per lb touched on Nov. 10.
The arabicas market is supported by supply concerns following several years of below-par crops in Colombia, the leading supplier of high quality washed arabicas. A slight recovery is seen this year but the crop is still expected to be well below those harvested in the mid-2000s.
Liffe second-month robusta coffee futures slipped $18 or 0.95 percent to $1,884 tonne, within sight of a two-year high of $2,098 per tonne touched on Nov. 9.
The robusta harvest in top producer Vietnam weighed on the market.
ICE cocoa futures edged down in thin volumes, pressured by main crop harvests in West Africa.
ICE second month cocoa was down $24 or 0.85 percent at $2,798 per tonne at 1223 GMT.
Liffe second-month cocoa was down 4 pounds or 0.2 percent to 1,854 pounds per tonne in modest volume of 1,861 lots.
Dealers are tracking the election process in top producer Ivory Coast after peaceful polls there on Oct. 31.
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