Coffee and cocoa ease

ICE arabica coffee dipped but held above a recent 17-month low on Wednesday as a stronger dollar and expectations of a large Brazilian crop weighed on prices, while US cocoa futures also retreated on currency pressure. Raw sugar futures bucked the day's weak trend in commodities and rose slightly for the third straight day, after tapping a one-month low early this week.
The dollar reached a one-month high against the euro in a continued afterglow after the Federal Reserve on Tuesday upgraded its economic outlook amid a string of US data indicating a sustainable recovery. A strong greenback often pressures dollar-traded commodities as it attracts investors holding other currencies to buy these markets. May arabica futures fell 2.55 cents, or 1.4 percent, to settle at $1.8360 per lb.
Prices have fallen around 40 percent from a 34-year high hit in May 2011 as expectations of a much larger global crop in 2012/13 have eased concerns about tight supply. "I would say that the Brazilian crop is looming on the horizon, and this is of course pressuring prices because it is expected to be rather big," said Stefan Uhlenbrock, an analyst with F.O. Licht. Dealers said the prospect of a global surplus in 2012/13 had helped to diminish investor appetite for the commodity.
Arabica futures remained oversold on the relative strength index. "We could be forming a near-term bottom here," said Boyd Cruel, softs analyst for Vision Financial Markets in Chicago. Cruel pegged support at $1.80 per lb. Benchmark Liffe May robusta coffee futures rose $31, or 1.6 percent, to close at $2,003 a tonne after slipping in early trade.
"The market has been supported recently by the lack of willingness by Vietnamese farmers and exporters to sell their beans, but these should reach the market soon and selling should accelerate because at some time they will have to get rid of their stocks ahead of the next crop," Uhlenbrock said. Cocoa futures fell as the markets continued to consolidate after last week's strong advance.
May cocoa futures on ICE fell $58, or 2.5 percent, to settle at $2,314 a tonne, while Liffe May cocoa futures dropped 31 pounds, or 2 percent, to end at 1,506 pounds a tonne. "We see this persistent origin hedging keeping the market under wraps," one London-based trader said.
The chairman of the Indonesian Cocoa Association said heavy rains in the first quarter would lead to a 60 percent slump in its bean output compared with a year ago. The full-year figure is likely to show a near-10 percent increase. Raw sugar futures traded in a band, with early weakness caused by a firm dollar running into consumer interest at the market's lows, analysts said. May raw sugar on ICE rose 0.31 cent, or 1.3 percent, to settle at 24.44 cents a lb after dipping in earlier trade. London May white sugar futures closed up $7.60, or 1.2 percent, at $648.90 per tonne.