Arabica coffee futures edged higher on Wednesday in choppy conditions with the next move uncertain after a recent surge to a more than two-year high was followed by a sharp setback. March arabica coffee was up 0.15 cents, or 0.1%, at $1.3385 per lb at 1449 GMT.
The contract rose to a peak of $1.4245 on Tuesday, the highest for the benchmark second position since September 2017, before suffering a sharp setback.
Prices had been rising sharply since mid-October supported by fund buying against the backdrop of tightening supplies with exchange arabica stocks falling and a global deficit widely forecast for the 2019/20 season.
Concerns that dry weather in Brazil could curb production in the 2020/21 season have also been supportive.
"It remains to be seen how long the price euphoria will continue. After all, even though it was too dry in some parts of the coffee belt in September and October, most observers expect the next high-yield crop in Brazil (2020/21) ... to achieve a new record," Commerzbank said in a market note.
March robusta coffee was up $15, or 1.1%, at $1,431 a tonne.
March raw sugar rose 0.15 cents, or 1.1%, to 13.42 cents per lb, edging up towards last week's more than one-year high of 13.67 cents.
Dealers said the market had been consolidating this week with funds now having largely covered a net short position which exceeded 200,000 lots in early November.
Prices remained underpinned by a global sugar deficit in the current 2019/20 season.
Dealers said sugar output in India was running well behind last year's pace but said a delayed start to the harvest in Maharashtra might have inflated the season-to-date decline and a clearer picture should emerge in the first quarter of 2020.
Sugar mills in India produced 4.58 million tonnes since the season began on Oct. 1, down 35% year on year, an industry body said on Wednesday.
March white sugar rose $2.40, or 0.7%, to $355.10 a tonne.
March New York cocoa was up $11, or 0.4%, at $2,545 a tonne.
March London cocoa rose 8 pounds, or 0.45%, to 1,791 pounds a tonne.
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