Robusta coffee sets 4-1/2 years high, sugar rises

Robusta coffee futures on ICE rose to a 4-1/2 year high on Wednesday as funds extended long positions against the backdrop of tight supplies. March robusta coffee futures were up $60, or 2.8 percent, at $2,222 a tonne at 1457 GMT, after rising to a peak of $2,229, the highest for the second position since July 2012. Supplies have tightened due to poor robusta crops in Brazil and Indonesia combined with a drop in production in Vietnam, where the harvest is winding down.
The net long position held by speculators has been rising this month, and is now near a recent peak of 37,470 lots as of November 1. Speculators were already holding a net long of 34,372 lots, as of January 3, according to exchange data.
"The market is nearing the top end of its range. Everyone is talking $2,500 but I'm not sure there is much more (buying) from the spec side," one London dealer said. March arabica coffee futures were up 2.65 cents, or 1.8 percent, at $1.5035 per lb. Raw sugar prices were also higher with March up 0.22 cents, or 1.1 percent, at 20.70 cents a lb.
Dealers said the market had been boosted by production woes in top consumer India. A rise in sugar prices in the local market of more than 10 percent in a month had led to talk that the government may cut import duty.
India's Food Minister Ram Vilas Paswan said on Wednesday, however, the government was not considering such a move, at least in the near term. Dealers said drought has done more damage than initially expected in the western state of Maharashtra but there has been a rise in production in the northern state of Uttar Pradesh. "The forecasts for production are therefore still unclear which perhaps justifies the government's reluctance to cut the import duty," Sucden Financial senior trader Nick Penney said.
March white sugar was up $5.90, or 1.1 percent, at $542.30 per tonne. Cocoa futures were lower as the prospect for a large global surplus in the current 2016/17 season kept the market on the defensive. March New York cocoa was $71, or 3.2 percent, lower at $2,136 per tonne, heading back down towards a 3-1/2 year low of $2,119 set last week. March London cocoa was down 36 pounds, or 2.0 percent, at 1,762 pounds a tonne.