Tuesday, 17 March 2015 17:08
LONDON: Arabica coffee futures on ICE steadied on Tuesday after surging more than 6 percent, the biggest one-day jump since October, on short-covering in the prior session. Sugar was flat.
New York and London cocoa also steadied, trading near the lowest levels since February with demand still viewed as weak.
Arabica coffee and raw sugar futures were capped by an easing of the real late on Monday. A weak Brazilian currency encourages producers there to lock in returns from dollar-denominated sugar and coffee sales.
“Industry is happy to buy at these prices,” a London-based arabica coffee futures broker said.
“The support to the market seems to be relatively tangible. The market had been nailed to the floor for a number of sessions, and now we’ve had a bit of an uptick.”
May arabica futures were up 0.6 cents, or 0.4 percent, at $ 1.3865 per lb at 1035 GMT, well above Friday’s 13-month low of $ 1.2875.
Monday’s rally lifted prices above technically oversold levels on a 14-day relative strength index chart.
May robusta coffee rose $ 24 or 1.4 percent to $ 1,787 per tonne, well above Friday’s lowest level since January 2014 of $ 1,685 per tonne.
Front-month raw sugar was flat at 12.90 cents a lb, having slid 4.8 percent on Friday to the lowest for the spot contract since April 2009 at 12.57 cents.
“The price trend of raw sugar could depend on the opening of the real. We see a strong correlation,” said Tracey Allen, commodity analyst with Rabobank.
Weaker oil prices also weighed on the sugar market. Cheaper oil reduces the appeal of cane-based ethanol biofuel.
May white sugar was down $ 1.20, or 0.3 percent, at $ 366.90 a tonne.
New York May cocoa was down $ 9, or 0.3 percent, at $ 2,782 a tonne, while May London cocoa eased 3 pounds, or 0.15 percent, to 1,966 pounds a tonne.
Copyright Reuters, 2015