Thursday, 03 January 2013 03:34
NEW YORK/LONDON: Arabica coffee futures on ICE soared more than 4 percent on Wednesday as the end of the US "fiscal cliff" crisis led investors to buy riskier assets and drew them to the worst performing commodity complex of 2012.
Sugar and cocoa markets on ICE Futures US climbed on support from firm outside markets including oil and copper. But Liffe cocoa futures sank to an 8-1/2 month low as supply prospects improved in West Africa.
The US Congress approved a deal to avert mandated tax increases and spending cuts, a decision expected to buoy investor appetite for commodities and other risky assets.
The Thomson Reuters-Jefferies CRB index, a global benchmark for commodities made up of 19 different markets, was up about 0.5 percent. It pared gains after jumping to a one-month high.
The softs markets were closed on Tuesday for the New Year's Day holiday, and openings were delayed on Wednesday.
Arabica coffee futures on ICE rebounded after sliding on the last day of trading in 2012 when it closed down 2.1 percent on the day and 36.6 percent for the year, their weakest annual performance in 12 years. The commodity was the weakest performer in the CRB.
March arabica coffee jumped 5.2 cents, or 3.6 percent, to $1.49 per lb by 12:42 p.m. EST (1742 GMT).
"It's gotten a lot of publicity as being the worst commodity performer of 2012 so you have a lot of people trying to buy the poorest of 2012," said Spencer Patton, founder and chief investment officer of Steel Vine Investment in Chicago. "You're seeing people allocate capital to the most beaten down commodities."
One dealer in New York said arabica futures saw their biggest one-day rally in more than a month due to risk-on buying following the "fiscal cliff" aversion in the United States, as well as short-covering following the previous session's tumble and as speculators continue to hold a large net short position.
"There was a bit of a sell off ahead of year-end so in that respect it's not a surprise to see a bounce today," a London-based broker said.
"The US avoiding a fiscal cliff is shoring up a bit of (investor) confidence."
March robusta coffee futures finished up $18, or 0.9 percent, at $1,942 a tonne, after closing Monday up 6 percent on the year.
Dealers eyed the first day of deliveries against the January contract. Exchange data showed 2,209 lots (22,090 tonnes) were tendered on Wednesday.
Vietnamese robustas changed hands at discounts to London futures, but many roasters seemed to be well-stocked before the Tet lunar new year holiday next month, dealers said on Wednesday.
LONDON COCOA FALLS AGAINST THE GRAIN
Liffe May cocoa eased 4 pounds, or 0.3 percent, to settle at 1,438 pounds a tonne, after dipping to 1,429 pounds, their lowest level since April. The second position contract finished 2012 up 3 percent.
"We're probably looking at a slightly better supply situation, particularly in Ivory Coast, than we were 6 or 8 weeks ago," said Jonathan Parkman, joint head of Agriculture at Marex Spectron.
"The arrivals over the last two or three weeks in Ivory Coast have been stronger and I think the fact that rainfall in most of the cocoa regions continued later into December than is normally the case has probably helped the development of the early mid crop."
Analysts and traders outlook for 2012/13 cocoa supply and demand varies from balanced to expectations of a deficit exceeding 150,000 tonnes.
Benchmark March cocoa futures on ICE closed up $23, or 1 percent, at $2,259 per tonne, after finishing 2012 up 6 percent.
"All the commodities have gone up today with the US news triggering buying, but apart from that there's nothing fundamental driving sugar," said a London-based broker.
"We still have some producer selling at 21-22 cents, I'm not sure if the market's going to go there, but that's the target for some of them."
March white sugar on Liffe rose $4.20, or 0.8 percent, to $527.90 per tonne, after ending last year down 13 percent.
Center>Copyright Reuters, 2013