Arabica coffee rises on Brazil weather, NY cocoa also up

NEW YORK/LONDON: Arabica coffee futures gained almost 3% on Tuesday on short covering by funds as a strong polar air mass moves into top producer Brazil.

New York cocoa futures on ICE edged up as well, underpinned by a weak dollar although a favorable outlook for crops in West Africa and weak demand capped gains.

The US dollar fell against a basket of major currencies for a fifth consecutive trading day on Tuesday, reaching its lowest level in more than two years.

COCOA

December New York cocoa settled up $16, or 0.7%, to $2,445 a tonne with the market consolidating after its recent advance to a five-month high.

"In our view this higher price will not last long. The demand for cocoa is still far from its previous level and stocks are relatively high," ABN AMRO senior economist Casper Burgering said in a note.

Below average rainfall last week in most of top grower Ivory Coast's cocoa regions is expected to support the development of the upcoming main crop, with harvesting set to begin early, farmers said on Monday.

December London cocoa settled down 8 pounds, or 0.5%, to 1,673 pounds per tonne.

COFFEE

December arabica coffee settled up 3.6 cents, or 3.1%, at $1.2105 per lb.

Dealers said there was some short covering due to the arrival of a strong polar air mass in Brazil. But risks of frosts over coffee fields were small, according to local forecasters.

"The bullish story in the arabica market continues to be dominated by the declining certified stocks," Rabobank said in a note on Tuesday, adding much hinged on whether production falls in Central America and Colombia.

November robusta coffee settled up $18, or 1.3%, at $1,396 a tonne.

SUGAR

October raw sugar settled down 0.17 cents, or 1.3%, at 12.89 cents per lb, retreating further from Friday's five-month high of 13.28 cents.

October white sugar settled down $6.30, or 1.7%, at $373.40 a tonne.