Arabica coffee hits eight-month peak as Brazilian real firms

LONDON: Arabica coffee futures on ICE rose to their highest in eight months on Tuesday as the Brazilian real strengthened and investors continued to pile into agricultural commodities, encouraged by improved macroeconomic sentiment.

COFFEE

December arabica coffee rose 0.5 cents, or 0.4%, to $1.2950 per lb, having touched its highest since Jan. 2 at $1.3270.

Dealers said it was mostly fund buying driving the rally, meaning it is built on fragile ground because fundamentals remain weak overall, notwithstanding tightness in exchange-deliverable coffee grades.

The real rose more than 2% against the dollar, lowering the value of dollar-priced Brazilian coffee exports in local currency terms and deterring sales.

November robusta coffee rose $26, or 1.8%, to $1,455 a tonne.

US instant coffee prices rose 5.5% in the second quarter while volume sales rose 13.7% as consumers, many of whom are working from home because of the COVID-19 pandemic, drank more of the cheaper coffee blend.

Indonesia exported 17,104 tonnes of robusta coffee beans from Lampung province in August, data showed, down about 8% from the same month last year.

COCOA

December New York cocoa rose $13, or 0.5%, to $2,667 a tonne after hitting its highest in seven months on Monday.

Commerzbank said that a weak US dollar and a market environment that is "very much pro-agriculturals" is helping cocoa in the face of continuing weakness in fundamentals.

The International Cocoa Organization on Monday projected a 42,000 tonnes surplus for the 2019-20 global cocoa balance having previously forecast a deficit of 80,000 tonnes.

December London cocoa rose 24 pounds, or 1.4%, to 1,786 pounds a tonne.

SUGAR

October raw sugar rose 0.07 cents, or 0.6%, to 12.73 cents per lb.

Germany's refined sugar production from beets in the 2020/21 season starting now is forecast to fall to about 4.12 million tonnes from 4.23 million last season.

October white sugar rose $4.10, or 1.1%, to $363.80 a tonne.