LONDON: Arabica coffee futures on ICE fell on Tuesday after touching a three-week high amid concern over forecasts for frosts this week in top grower Brazil. Raw sugar and cocoa fell. September arabica coffee was down 1.4% at $1.6060 per lb by 1516 GMT, having hit its highest since early June at $1.6400.
A strong polar air mass is moving through South and Southeast areas of Brazil this week, with a drop in temperatures forecast for Wednesday and Thursday and risk of frost in some low-lying areas. Dealers said some weather models are pointing to a potential for frost in Parana state, Brazil's southernmost coffee-growing area.
Although the state accounts for less than 5% of total arabica production, frost can have an exponential effect on prices because it can kill the coffee tree outright. Weighing on coffee, however, were falls in the wider financial markets, where fears over a new Covid-19 variant prevailed.
September robusta coffee fell 1.7% to $1,682 a tonne. Top robusta producer Vietnam's coffee exports in the first half of the year fell 12.3% from a year earlier to 825,000 tonnes, data showed. July raw sugar fell 1.2% to 17.02 cents per lb, reversing some of the previous session's sharp gains.
Dealers said a lack of nearby demand, as evidenced in the widening discount for July sugar over October, continues to weigh on the market. They added, however, that there is firm support around 17 cents, especially as concerns over Brazil's cane crop, also at risk from the cold weather, are only likely to increase going forward.
Also, mills in Brazil are slowly beginning to reduce the amount of cane used to produce sugar, increasingly favouring biofuel ethanol. August white sugar fell 0.4% to $431.80 a tonne. September New York cocoa rose 0.6% to $2,393 a tonne. September London cocoa rose 0.7% to 1,625 pounds a tonne.
Ghana's cocoa arrivals reached 960,892 tonnes between from Oct. 1 to June 10, up from 752,639 tonnes the previous season. Cocoa arrivals at ports in top grower Ivory Coast reached 2.079 million tonnes between Oct. 1 and June 27, up 6% from last season's 1.962 million tonnes.
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