Liffe coffee sets 2-1/4-year peak, sugar tumbles

Liffe May robusta coffee ended $16 higher at $2,268 a tonne on Thursday after rising to a peak of $2,287, the highest for the second month since August 2008. Market supported strength of ICE arabicas, which climbed to a 13-1/2 year high on Thursday.Liffe March white sugar tumbled $30.30 to close at $814.20 per tonne as massive cyclone in Australia did less damage that feared. Market also seen technically overbought after rising to a record $857.00 during the prior session.
Liffe May cocoa ended unchanged at 2,173 pounds a tonne. Prices remain underpinned by the ongoing crisis in top producer Ivory Coast. "We expect prices to hit further highs (in the first half of 2011) on production downgrades, the decline in global stocks and supply tightness that should keep markets fearful of any disruptions," Barclays Capital said in a report on Thursday. Dealers said coffee had also been supported by an inflow of fund money linked to a broad-based rise in commodity markets.
"There certainly buying en-masse into the commodities market at the moment. Today it is more of a macro-based rally," one London-based broker said. Global food prices hit a record high in January, the UN Food and Agriculture Organisation said on Thursday, adding that prices - already above the 2008 levels which sparked riots - were likely to rise further.
Raw sugar futures dropped, recoiling from their highest price in three decades, after a massive cyclone that hit Australia destroyed less of the sugar crop than feared. A key industry body said Cyclone Yasi may have destroyed about 15 percent of the crop in Australia, the world's third-largest sugar exporter after Brazil and Thailand. But fresh supply from other key growers could keep the sugar rally in check, analysts told Reuters.
The cyclone exacerbated a market already driven higher by falling stocks, a lack of Indian exports and largely flat production in Brazil, suggesting prices would rise further in the first half of the year, said Barclays Capital analyst Sudakshina Unnikrishnan. Cocoa prices firmed, continuing to waver just below their one-year peak from a week ago, as investors awaited fresh news about the political situation in top grower Ivory Coast after a month-long export ban was called last week.