Tuesday, 24 March 2015 21:37
LONDON: Arabica coffee and raw sugar futures turned lower on Tuesday, weighed down by renewed weakness in Brazil’s real currency, while cocoa extended earlier losses.
The currency had strengthened against the dollar on Monday and early on Tuesday but the rally proved short-lived and the overall trend remained bearish.
“The main story is still in place that the weak real is pushing down prices of soft commodities especially arabica coffee and raw sugar,” Commerzbank analyst Michaela Kuhl said.
Brazil is the top producer of both arabica coffee and sugar. System funds have been selling both commodities whenever the currency drops. A weak real also means growers in Brazil are to some extend shielded from the fall in international prices.
May arabica coffee on ICE was off 1.00 cents or 0.7 percent at $ 1.4085 per lb at 1512 GMT, well below its session high of $ 1.4540.
The market was also keeping a close watch on the outlook for the arabica harvest in Brazil.
“It is a very diverse picture at the moment and we will have to wait to see what the first results of the harvest will be when it starts in April,” Kuhl said.
Robusta coffee futures were little changed with May up a marginal $ 1 or 0.05 percent at $ 1,839 a tonne.
Dealers said the robusta market was underpinned by talk that Brazil’s conillon (robusta) crop may be smaller than expected this year and concern about dry weather in Vietnam.
One analyst, however, downplayed those concerns.
“There are dry areas (in Vietnam) and there are also areas with humidity in the region, these are normal conditions,” said independent analyst Nguyen Quang Binh.
Raw sugar futures were lower with May off 0.10 cents or 0.8 percent at 12.64 cents a lb after earlier peaking at 12.92 cents while May white sugar fell $ 1.40 or 0.4 percent to $ 367.50 a tonne.
Cocoa futures were lower with May New York off $ 30 or 1.1 percent at $ 2,727 a tonne, drifting back down towards last week’s low of $ 2,697.
Dealers said the market remained weighed down by weak demand while rains had improved the outlook for the mid-crop in top producer Ivory Coast.
May London cocoa fell 6 pounds or 0.3 percent to 1,914 pounds a tonne.
Copyright Reuters, 2015
