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Wednesday, October 4, 2023

Arabica coffee near 1-1/2-year low, sugar inches up

Arabica coffee near 1-1/2-year low, sugar inches upLONDON: Arabica coffee futures edged up on fund buying on Tuesday after trading near a 1-1/2-year low, while robustas recovered from a two-month low and sugar firmed with gains capped by forecasts of dry weather in Brazil. Cocoa was little changed in thin volumes.

September arabica was up 0.9 cents, or 0.8 percent, at $ 1.2130 per lb at 1309 GMT, recovering ground after slipping to just above Monday’s 1-1/2-year low of $ 1.1985.

“Arabicas are driven by funds. Roasters and origin selling are pretty quiet right now,” said Kona Haque, head of research at commodities house ED&F Man.

In robusta coffee, traders focused on a large front-month spread’s premium before the July contract expires on Friday. September robustas traded up $ 10, or 0.6 percent, at $ 1,637 a tonne, after touching a two-month low of $ 1,624.

Raw sugar futures edged up on technically driven buying, trading near a five-week low, with upside capped by forecasts of dry weather in centre-south Brazil and a weak Brazilian real.

A soft real currency boosts incentives for Brazilian producers to sell dollar-based sugar and arabica coffee and lock in local currency returns.

“It has been a recent feature of the sugar market that values begin to move sharply once the FX market in Brazil opens and we suspect producers there have lowered their pricing ideas as the real has weakened,” said Nick Penney, a senior trader with Sucden Financial Sugar. Haque said, “For today, macro and currency factors are having more impact than weather, but part of the reason why sugar is at these lows is that there are forecasts for dry weather in Brazil.”

A huge overhang of Indian and Thai old-crop sugar continued to weigh on the market.

October raw sugar was up 0.03 cents or 0.3 percent at 11.27 cents a lb, having fallen on Monday to a five-week low of 11.17 cents. October white sugar futures traded up $ 0.80, or 0.2 percent, at $ 349.90 per tonne.

September New York cocoa traded down $ 10, or 0.3 percent, at $ 3,183 a tonne, while September London cocoa was down 6 pounds or 0.3 percent at 2,125 pounds a tonne.

Copyright Reuters, 2015

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