Arabica coffee hits 3-week high on Brazil frost fears

LONDON: Arabica coffee futures on ICE hit a three week high on Monday amid ongoing concern over forecasts for frosts this week in top grower Brazil.

Raw sugar and cocoa fell.

COFFEE

September arabica coffee was up 0.3% at $1.6310 per lb by 1148 GMT, having hit its highest since early June at $1.6400.

A strong polar air mass is moving through South and Southeast areas in Brazil this week, with a drop in temperatures forecast for Wednesday and Thursday and risk of frost in some low-lying areas.

Dealers said some weather models are pointing to a potential for frost in Parana state, Brazil's southernmost coffee growing area.

Although the state accounts for less than 5% of total arabica production, onset of frost can have an exponential effect on prices because it kills the coffee tree outright.

Brazil is already harvesting a smaller-than-normal crop due to dryness this year.

September robusta coffee slipped 0.3% to $1,706 a tonne.

Top robusta producer Vietnam's coffee exports in the first half of the year fell 12.3% from a year earlier to 825,000 tonnes, data showed.

SUGAR

July raw sugar fell 0.8% to 17.09 cents per lb, reversing some of the previous session's sharp gains.

Dealers said a lack of nearby demand, as evidenced in the widening discount for July sugar over October, continues to weigh on the market.

They added, however, there is firm support around 17 cents, especially as concerns over Brazil's cane crop, also at risk from the cold weather, are only likely to increase going forward.

Also, mills in Brazil are slowly beginning to reduce the amount of cane used to produce sugar, increasingly favoring biofuel ethanol.

August white sugar fell 0.5% to $431.20 a tonne.

COCOA

September New York cocoa fell 0.4% to $2,371 a tonne.

September London cocoa fell 0.4% to 1,608 pounds per tonne?.

Ghana's cocoa arrivals reached 960,892 tonnes between Oct.1 to June 10, up from 752,639 tonnes from the previous season.

Cocoa arrivals at ports in top grower Ivory Coast reached 2.079 million tonnes between Oct. 1 and June 27, up 6% from 1.962 million tonnes last season.