Arabica sinks

Arabica coffee futures tumbled 4 percent on Tuesday in their biggest decline since October, closing at a 14-month low on origin and commercial selling that triggered automatic sell orders. But as coffee fell, cocoa soared on heavy investor short-covering. Sugar futures dropped more than 2 percent after ratings agency Moody's decision to downgrade several European countries dampened investor appetite for riskier assets.
Arabica coffee futures on ICE sank with May finishing down 8.45 cents, or 3.9 percent, at $2.0615 per lb, the weakest settlement for the second position since December 2010. Post-settlement, the contract extended its losses down 4.3 percent to $2.0530 per lb. The New York arabica market failed to garner any spillover strength from Liffe's robusta coffee futures, which remained in backwardation after the spot contract moved to a premium late last week.
One US dealer cited talk that funds and commercials holding long positions in arabica futures have been growing disappointed by the market's performance and have been liquidating. When the benchmark May contract hit the psychological level of $2.10 per lb, a wave of sell-stops pushed the market even lower, he said.
Robusta coffee futures continued higher, with dealers expecting the premium on March would trigger shipments from Vietnam. The March contract widened to close at $156 per tonne premium over May. Vietnam's coffee export loading in February is expected to rise to 120,000-150,000 tonnes, as exporters cash in on price gains, traders said. March robusta coffee on Liffe closed up $36, or 1.7 percent, at $2,110 a tonne, while May ended up $10 at $1,954 a tonne. Cocoa futures changed direction and soared, after rising above a short-term downtrend line at $2,230 per lb, basis May , failing to fall below Friday's one-month low as talks continued between industry and government over Ivory Coast's cocoa sector reforms. The auctioning system was launched there in January.
"Cocoa had its Valentine's Day rally," said Nick Gentile, chief trading official at commodity fund Atlantic Capital Advisors in New Jersey. ICE May cocoa settled up $78, or 3.6 percent, at $2,270 a tonne, soaring 5.9 percent to a high of $2,322 after the settlement window. Liffe May cocoa futures jumped 40 pounds, or 2.8 percent, to end at 1,483 pounds a tonne. March raw sugar futures on ICE dropped 0.39 cent, or 1.6 percent, to close at 24.25 cents a lb, London May white sugar futures sank $15.00, or 2.4 percent, to end at $622.80 per tonne.