Liffe sugar eases, coffee dips

London white sugar futures eased in light trading on Monday to levels that were still near four-month highs, underpinned by concerns over the size of top producer Brazil's crop, while coffee reversed early gains and cocoa firmed. Agricultural markets trading on ICE Futures US were shut for the Independence Day holiday and will reopen on Tuesday. Volumes in the London softs markets were light because of the US holiday.
"We've seen some light producer selling," one London soft commodities dealer said. Liffe August white sugar futures settled $4.60 or 0.6 percent lower at $765.00 per tonne. Prices were supported by concerns over the size of the Brazilian crop after a slow start to the harvest in the centre-south and reports of disappointing yields. A European broker, in a daily report, noted talk that at least two cargoes had been sold back to traders by Chinese importers. There was no independent confirmation.
"Chinese domestic prices have been drifting slowly through the year and import margins have turned negative as the world price has rallied," the broker said. The recent rally in sugar futures, driven by downwardly revised forecasts for Brazilian output, had led Chinese import margins to turn negative. Dealers said they were on tenterhooks before the release of the next report by Brazilian cane growers' group Unica, due in early July, which is expected to revise Brazilian output down.
"We expect the Unica figure to be much lower - 545 or 540 million tonnes perhaps," said Nick Penney oof brokerage Sucden Financial Some producers have said centre-south Brazilian cane output could be as low as 520 million tonnes. Liffe robusta coffee futures eased slightly in thin trade as the market continued to consolidate following a strong run-up early last week. Dealers said prices remained underpinned by supply tightness ahead of the next harvest in top robusta producer Vietnam in the fourth quarter of this year.
Vietnam has lowered the annual coffee export forecast for calendar 2011 by 3 percent to 1.26 million tonnes, or 21 million bags, based on a low level of stocks in the country, the agriculture ministry said on Monday. Liffe September coffee reversed early gains and ended $6 lower at $2,466 per tonne.
"My bet is on robusta prices having room for further upside as stocks are drawn down," one London robusta coffee futures dealer said. The dealer said risks of frost in top coffee producer Brazil appeared to be receding, based on the latest weather forecasts that he had seen. Dealers kept a close eye on Brazil's weather forecasts after a frost in a minor coffee-growing region caused a jump in prices last week.
Liffe cocoa futures edged up, supported by pent-up physical demand for beans following Ivory Coast's resumption of trade in May. "In the last 10 days we have seen some very good commercial buying around, and the shorts have had to cover," one London cocoa futures dealer said.
Liffe September cocoa ended 11 pounds higher at 2,003 pounds a tonne. Cocoa arrivals at ports in top grower Ivory Coast reached around 1,287,000 tonnes by July 3, exporters estimated on Monday, compared with 1,058,911 tonnes in the same period of the previous season. Rising production in Africa, a surplus in international markets, erratic weather in Indonesia, global economic health and hopes for a recovery in the grinding sector will dominate a cocoa conference in the Indonesian resort island of Bali this week.