Robusta coffee up on slow Vietnamese exports, weak dollar

Friday, 10 February 2012 00:09

NEW YORK/LONDON: Robusta coffee futures rose on Thursday partly because bean exports from Vietnam slowed and could force buyers to draw down European stocks, with a weak dollar giving a boost to both coffee and sugar values.

The commodity complex was also bolstered by increased risk appetite as Greece confirmed it had clinched a deal for emergency aid, pushing the protracted euro zone debt crisis which has roiled financial markets closer to resolution.

May robusta futures were up $40 or over 2 percent to conclude at $1,930 a tonne. But New York's May arabicas lost 4.35 cents to finish at $2.1825 per lb.

"It's mostly dollar-related," said The Price Group analyst Jack Scoville. "That sort of turned the tide a little bit."

"There's a lot of money on the sidelines looking to come back into commodities," said Jeremy Gatto, head of trading at commodities hedge fund Tiberius Asset Management. "There's been a turnaround in the dollar which is friendly to commodities."

Coffee dealers said exports out of Vietnam, the world's top robusta producer, has been slow out of the main port in Ho Chi Minh city.

"What's happening is just a short-term glitch in terms of coffee leaving Ho Chi Minh," said a London-based broker. "I don't imagine anyone would have a great appetite to take delivery of certifieds especially when there is coffee coming out of Vietnam, albeit slowly."

The March robusta coffee contract switched to a premium of around $20 from a discount to May, pushing the spot contract into an inversion to the second position for the first time since April 2011.

The narrowing March/May spread boosted volume ahead of the March contract's first notice day Feb. 21, dealers said.

"It seems to be options-related," said one US dealer who trades the Liffe robusta market. Robusta March options will expire next week.

The market was probably given encouragement by news that top producer Brazil shipped 1.86 million 60-kg bags of unroasted, green beans in January, down 28 percent from 2.59 million bags in the same month of 2011, the Council of Green Coffee Exporters, Cecafe, said on Wednesday.

SUGAR FIRM, COCOA WEAK

Sugar futures climbed due to the weak dollar, with prospects of longer-term demand from China a factor supporting the market.

March raw sugar futures on ICE rose 0.05 cent to end at 24.53 cents a lb. London March white sugar futures added $6.30 to close at $653.30 per tonne.

"The direction the market will take does depend on the strength of the dollar, unless we suddenly see a substantial increase in end destination demand," said a London-based broker.

ED&F Man Sugar Ltd has won a tender to supply 25,000 tonnes of sugar to Bangladesh at $670.59 a tonne C&F.

Cocoa futures eased, under pressure from surplus supplies after a bumper 2010/11 crop, with an expected fall in West African production helping to underpin prices.

"Lower output in 2011/12 is not enough to stem sluggishness," said Standard Chartered in a commodities note.

Cocoa futures edged lower. New York's May cocoa contract declined $34 or almost 1.5 percent to end at $2,244 a tonne. London's Liffe May cocoa futures was down 18 pounds to finish at 1,468 pounds a tonne.

March/May spreading continued to dominate the session and boost volume before the March contract's first notice day Feb. 15. The spread continued to narrow to around $9, from $15 on Wednesday.