Arabica coffee at three-week low, cocoa drops

Arabica coffee futures fell to a three-week low on Monday after data showed speculators had already covered more short positions than expected, while cocoa prices gave up the prior session's gains in seesaw dealings. July arabica coffee settled down 1.8 cent, or 1.5 percent, at $1.176 per lb, after falling to its weakest since April 20 at $1.172.
Prices were pressured by US government data released after markets closed on Friday showing speculators had covered a larger chunk of their short position than participants had expected, dealers said. This took speculators' bearish stance in arabica futures and options to the smallest in 2018 so far and signaled that fund short-covering, which recently lifted prices to their highest in nearly three months, may have run its course.
"Knowing the strong hand of the funds and what they can re-establish in short positions, the industry buying is certainly not enough to keep the market on firm footing," one dealer said. Prices have also been under pressure from a weakening Brazilian currency, which fell to a two-year low against the US dollar.
July robusta coffee settled down $16, or 0.9 percent, at $1,742 per tonne.
Brazil's weak currency was also seen pressuring robusta prices due to the country's large crop.
"With the real as weak as it's been, it undoubtedly brings Brazil closer to the robusta market," one dealer said.
July New York cocoa settled down $26, or 0.9 percent, at $2,779 per tonne, shrugging off earlier support from the firm British pound versus the US dollar.
July London cocoa settled down 19 pounds, or 1 percent, at 1,927 pounds per tonne.
Cocoa dealers are snapping up West African beans for import to the United States, according to trade sources, as they seek to profit from the steepest premium for the chocolate ingredient in over 40 years in the New York market.
July raw sugar settled up 0.04 cent, or 0.36 percent, at 11.26 cents per lb.
The market held well within its three-week trading range, with prices hovering above last month's 2015 low on ample global supplies and as worries about dry weather in Brazil ease ahead of expected rains. "(Rains) could prevent any further deterioration and boost the growth of the sugar cane for the next crop," Commerzbank said in a note. August white sugar settled up 40 cents, or 0.1 percent, at $321.10 per tonne.