LONDON: Arabica coffee steadied on Wednesday as investors paused for breath after prices hit a 4-1/2-year high in the prior session on concerns over a drought in top producer Brazil.
July arabica coffee slipped 0.1% to $1.6090 per lb at 1517 GMT, after setting a 4-1/2-year high of $1.6675 on Tuesday.
“(There are) huge stocks in Brazil and Vietnam (and) bulky (ICE exchange) certified stocks. However, funds are taking the market by storm and, in moments of panic, the suppy/demand (balance) has only a marginal impact on pricing,” Rabobank cautioned in a monthly report.
“Fundamentals may become important only when the next arabica contract (July) approaches delivery and the reality of over 2 million certified bags (of ICE exchange stock) might weigh on the market,” it added.
Investors are nervous and inclined to buy given talk that the worst dry spell in 91 years in Brazil is hurting the development of the upcoming 2022/23 crop, with dry weather having already hurt the current crop.
There were signs on Tuesday that Colombian protesters could clear roads before new talks with the government, so coffee exports could resume.
July robusta coffee fell 0.4% to $1,585 a tonne, after setting a 2-1/2-year high of $1,619 on Tuesday.
Indonesia’s Lampung province exported 5,575.50 tonnes of Sumatran robusta coffee beans in May, down nearly 41% year-on-year.
July raw sugar rose 0.2% to 17.73 cents per lb, having set a near one-month high of 17.93 earlier.
Dealers said sugar looks set to remain firm amid positive sentiment in the wider financial markets and concerns over the drought Brazil, also a top sugar producer.
They see sugar testing Tuesday’s highs as end-users still have lots of buying to do, but cautioned 18 cents could be a top as that is roughly the level at which some Indian sugar sales were concluded last month without government export subsidies.
August white sugar rose 0.7% to $467.90 a tonne.
The lowest price offered in the international tender to buy 50,000 tonnes of sugar from Pakistan on Wednesday is believed to be $533.90 tonne c&f, European traders said.
September New York cocoa rose 0.3% to $2,474 a tonne. The International Cocoa Organization on Monday forecast a global cocoa surplus of 165,000 tonnes in the current 2020/21 season. September London cocoa fell 0.6% to 1,630 pounds per tonne.
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