NEW YORK/LONDON: Liffe's robusta coffee futures fell to the lowest level in more than a year on Friday on harvest pressure in top grower Vietnam, while arabica reversed higher in late dealings after feeling earlier pressure from the strong US dollar.
Cocoa and sugar futures were little changed in lackluster dealings as both markets appeared to be near a bottom.
The euro hit a near 16-month low against a robust dollar as investors looked at sovereign funding concerns in Europe and compared the economic outlook for the euro zone to an improving US recovery.
The softs markets failed to react to data showing solid growth in US employment last month after the jobless rate dropped to a near three-year low of 8.5 percent, offering the strongest evidence yet of an acceleration in economic activity.
London March robusta coffee futures closed down $54, or 3 percent, at $1,720 per tonne, having earlier touched a 14-month low of $1,717 per tonne, basis second month, pressured by a big harvest in top producer Vietnam.
The market fell for the third straight day as dealers anticipated Vietnamese origin selling ahead of the Tet new year festival that will begin Jan. 23 and last for a week.
ICE March arabica futures eased, weighed by the stronger dollar, after their biggest fall in more than two months on Thursday, driven by investor sales. They reversed late-day to settle up 2.20 cents, or 1 percent, at $2.2175 per lb in choppy dealings.
"Other than the dollar, I'm fundamentally bullish and from what I hear, everyone else in the physical market is bullish," said one US dealer active in both futures and cash coffee markets.
Coffee's fundamentals are bullish early in 2012 due to weather-related problems in major washed-arabica producer Colombia, which have led to reduced crop forecasts.
The US Climate Prediction Center warned on Thursday that La Nina, the weather phenomenon blamed for searing drought in the southern United States and South America, may last longer than expected into the Northern Hemisphere spring.
ICE benchmark raw sugar futures inched up 0.16 cent, or 0.7 percent, to finish at 23.29 cents a lb, well below Wednesday's even-week peak of 24.65 cents per lb.
Sugar futures tumbled more than 5 percent on Thursday after hitting a wave of sell-stops.
"They pushed it right back down to support down yesterday and nobody seems to be terribly interested in it at the minute," said Jack Scoville, analyst for the Price Futures Group in Chicago.
"There isn't any big news for sugar."
Some dealers cited talk of index fund re-weighting in sugar, expected to start on Monday, which should result in net buying of the sweetener. Dealers said the market expected index funds to boost weightings of sugar after last year's price slide.
Potential upside in sugar prices continued to be limited by big crops in the European Union, Russia, Ukraine, India and Thailand. The European Union may ditch upcoming sugar import tenders due to ample domestic supplies, trade sources said on Thursday.
London March white sugar futures reversed up 50 cents to settle at $604.00 per tonne.
India extended the deadline for mills and factories to apply for sugar export permits, the government said, a move expected to boost sluggish exports from the world's second biggest producer.
"I am bearish in the first half of the year but bullish in the second half. I don't think the Brazilian crop will increase as much as some people are expecting," said Kona Haque, a soft commodities analyst with Macquarie Bank.
She said the news about Indian permits was a bearish signal for sugar as it boosted prospects for exports.
ICE March cocoa futures finished flat at $2,028 per tonne in quiet dealings, with upside potential limited by plentiful African supplies.
"Prices are very attractive at these levels. Have we reached bottom? Probably not," Haque said, adding that industry appeared to have ample near-term coverage for requirements.
Scoville said the market appeared to be running out of Reuters
"I think cocoa is one market that may be close to a bottom here. Very close to spike low we made in December," he said.
"I think people are just waiting to see if we're at a bottom or not."
Copyright Reuters, 2012
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