Liffe coffee down, sugar advances

Liffe September robusta coffee ended $66 weaker at $2,276 a tonne on Monday, after hitting $2,269, the lowest level for the second month since mid-February. Market weighed by harvest progress in top coffee producer Brazil and broad-based losses in oil and other commodity markets as the debt crisis in Greece eroded risk appetite.
Liffe August white sugar closes $12.00 higher at $739.60 per tonne after setting a three-month peak for the front month of $741.40. Market supported by concern about low yields and a slow start to the harvest in Brazil. Liffe September cocoa ended 28 pounds higher at 1,857 pounds a tonne. Industry buying helped to trigger short covering with the market finally beginning to rebound following a prolonged downward trend in prices. Sugar prices were higher, buoyed by low yields and a slow start to the Brazilian harvest.
"The industry is quite content, they've bought quite a bit on these dips and I think that's triggered a bit of short covering here," a London-based broker said. Forecasts for a large global surplus in 2010/11 are expected to cap upward price movements, along with an easing of quality standards from top producer Ivory Coast. The country eased quality standards for cocoa exports during the remainder of the 2010-11 season to allow a smaller average bean size, authorities said on Friday.
Dealers said the decision was bearish for the near term outlook for cocoa prices as there were already ample supplies available. "Growing conditions have been pretty good, there certainly seems to be a fairly good surplus," the broker said. ICE arabica coffee futures eased as harvest pressure from top producer Brazil weighed and worries about the debt crisis in Greece eroded risk appetite.
Global stocks dipped and crude oil fell on Monday after eurozone finance ministers delayed a decision on extending emergency loans to Greece. "For softs, the link to the Greek debt problems is weaker than for metals and energy, but there is a link," said Romain Lathiere, fund manager with Diapason Commodities Management. "People want to bring cash back to the table and keep it in safer investments." Vietnam, the world's top robusta coffee producer, continued to see a shortage of available coffee in its seasonal lull between crops.
Vietnamese coffee exporters have delayed loading part of contracts totalling around 100,000 tonnes since May because of a shortage of stocks, an industry official said on Monday. Vietnam's coffee harvest usually starts in October/November. "The robusta supply outlook from Vietnam seems to be pretty good," Lathiere said. Dealers anticipate a large delivery against the expiry, likely including Brazilian and Thai sugars.
They also talked of market support from continuing congestion at Brazilian ports, and concerns over low yields after a slow start to the harvest in the top producer. "Yields could be lower than expected," Lathiere said. "It seems that sugar is continuing to shrug off weakness in other commodities," Nick Penney, of brokerage Sucden Financial said. "The markets are technically overbought, however, and we anticipate a correction in the near future if momentum fails to be maintained."