NEW YORK/LONDON: ICE arabica coffee turned higher on Friday after matching the previous day's four-year low and raw sugar rose as the Brazilian real rallied, stoking expectations that selling driven by currency weakness in Brazil, the top grower of both commodities, may slow.
ICE cocoa was firm as dealers continued to monitor weather in top grower Ivory Coast ahead of the coming main crop.
Trading volumes were light in all three New York markets. London markets will be closed on Monday for a bank holiday. Electronic trading for ICE raw sugar, coffee, and cocoa futures and options contracts will have a delayed start at 7:30 a.m. EDT (1130 GMT) due to the London holiday.
ICE second-month arabica coffee futures were up 0.25 cent, or 0.2 percent, at $1.1730 by 12:18 p.m. EDT, reversing earlier losses. The session low matched Thursday's four-year low of $1.1635 per lb.
The real jumped 2 percent after the Brazilian government unveiled a $60-billion currency intervention program. The real had hit a near five-year low against the US dollar this week.
A softening currency encourages selling of dollar-traded commodities as it increases their value relative to the real.
"We've got this Brazil intervention plan that's helping," said Nick Gentile, senior partner at commodity trading consultancy Atlantic Capital Advisors.
But expectations of huge supplies in Brazil weighed, capping gains. A hangover of stocks from last season combined with another large crop in Brazil contributed to surplus supplies.
"The crop is even better than expected. There's a lot of coffee in the pipeline," Gentile said.
Liffe November robusta coffee was down $20, or 1.1 percent, at $1,773 a tonne as ample supplies weighed and drove prices to an intraday low of $1,765, the weakest level since early July.
Vietnam new crop premiums dipped this week on anticipated record production in the world's top robusta grower.
Certified robusta coffee stocks held in NYSE Liffe nominated warehouses fell to 78,750 tonnes as of Aug. 19, from 83,770 tonnes on Aug. 5, exchange data showed.
SUGAR RISING
October raw sugar on ICE was up 0.16 cent, or 1 percent, at 16.44 cents per lb.
Prices were lifted by the real's gains and by short-covering by speculators that have trimmed back a large bearish position in raw sugar futures and options in recent weeks, dealers said.
"This seems like profit-taking. We got a technical bounce in sugar, because we have been trading so much lower," said Alex Oliveira, sugar trader at Newedge USA in New York.
The front-month contract was poised for its first daily gain in seven sessions.
Prices touched a three-year low of 15.93 cents a lb last month as huge supplies in Brazil weighed. The harvest in the top exporter was expected to continue progressing at a record pace, aided by dry weather.
Toby Cohen, director at commodities house Czarnikow, said he expected the next harvest update from Brazil's cane industry group Unica would show an increased allocation from cane to sugar compared with ethanol.
He said a weak Brazilian real and predominantly dry weather in Brazil in the first half of August would encourage mills to step up their allocation to sugar, which is mainly for export, compared with the second half of July.
"We expect the mix to show a heavier weight to sugar," Cohen said.
October white sugar on Liffe eased 20 cents, or 0.04 percent, to $482.00 a tonne.
December cocoa futures on ICE were up $11, or 0.4 percent, to finish at $2,465 a tonne, below Tuesday's nine-month high of $2,547.
"Rains, albeit small, are arriving at a much needed time. However, it still remains a case of watch this space and weather reports will be closely scrutinised over the coming days," said Justin Grandison, head of cocoa brokerage at ABN Amro Markets.
December cocoa in London finished up 7 pounds, or 0.4 percent, at 1,636 pounds a tonne, below the 11-month high hit on Tuesday of 1,673 pounds a tonne.
Comments
Comments are closed.