Monday, 16 March 2015 20:17
LONDON: Arabica coffee futures rallied over 5 percent on short covering on Monday after speculators raised a net short position in the latest U.S. Commitments of Traders data.
Raw sugar futures rose on technically driven buying boosted by a softer dollar versus a basket of currencies, after slumping 5 percent to a six-year low on Friday, driven by a sharp fall in the Brazilian currency.
Arabica coffee futures jumped in modest volumes as speculators covered short positions.
“Prices are lower than people had been envisaging,” one London-based coffee futures broker said.
Speculators raised a net short position in arabica coffee contracts on ICE Futures U.S. in the week ended March 10, U.S. Commodity Futures Trading Commission data showed on Friday.
May, second-month arabica futures traded up 5.5 cents, or 4.2 percent, at $ 1.3530 per lb at 1331 GMT, having earlier surged more than 5 percent to a session peak of $ 1.3670.
Second-month futures had slid to a 13-month low of $ 1.275 per lb on Friday, pressured by the slide in the real.
“Short-term indicators suggest the potential for modest gains towards $ 1.40,” said Myrto Sokou, senior research analyst with Sucden Financial.
Robusta coffee rose $ 23, or 1.35 percent, to trade at $ 1,731 per tonne, having fallen on Friday to $ 1,685 per tonne, the lowest since January 2014.
Front-month raw sugar rose 0.19 cents or 1.5 percent to 12.89 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 level of the Brazilian real is the biggest factor driving sugar prices,” said Tom McNeill of Green Pool Commodities.
“The weak real allows Brazilian producers to get on with pricing their 2015/16 crop, and implies that a larger portion will go to sugar,” he said.
The weak Brazilian currency boosts incentives for producers there to lock in local-currency returns from dollar-denominated sugar and coffee sales.
Expectations of a big Brazilian cane crop also weighed on sugar prices.
May white sugar was up $ 4.80, or 1.3 percent, at $ 367.50 a tonne.
New York May cocoa traded down $ 3, or 0.1 percent, at $ 2,815 a tonne.
May London cocoa eased 13 pounds, or 0.65 percent, to 1,981 pounds a tonne.
Copyright Reuters, 2015
