Coffee, cocoa and sugar retreat amid selloff in oil and equities
- September arabica coffee fell 2.6% to $1.5720 per lb, reversing Friday's gain of 2.7%
- September London cocoa fell 0.9% to 1,627 pounds a tonne
LONDON: Coffee, cocoa and sugar futures on ICE fell on Monday, reversing some of last week's gains as global equities and oil slumped on worries over surging COVID-19 cases worldwide.
COFFEE
September arabica coffee fell 2.6% to $1.5720 per lb, reversing Friday's gain of 2.7%.
ICE arabica speculators cut net long positions by 2,526 contracts to 20,839 in the week to July 13.
"With bullish factors mostly priced in, we believe arabica prices have reached an equilibrium in the $1.50-1.60 range in the short to medium-term," said Citi, noting price gains of about 20% so far this year.
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The bank, however, kept its 6-12 month price target at $1.70 on improved demand and weather risks. It also pegged the current crop year deficit at 8.9 million bags, citing demand growth and prolonged drought in top producer Brazil.
September robusta coffee fell 1.7% to $1,737 a tonne.
COCOA
September London cocoa fell 0.9% to 1,627 pounds a tonne.
September New York cocoa fell 1.8% to $2,328 a tonne.
ICE cocoa speculators trimmed their net short position by 6,274 contracts to 15,606 in the week to July 13.
"Record output in Ghana and still tepid grindings (in 4Q/1Q) leave the 2020/21 global cocoa market in a surplus of circa 260,000 tonnes. We leave our 2021 (price) estimate unchanged at $2,505," said Citi.
It added, however, that poor new-crop development and stronger demand in 2022 could tip the market into a slight deficit next year, pushing up prices to average $2,550 a tonne.
SUGAR
October raw sugar fell 1.6% to 17.42 cents per lb, having hit a 1-1/2 week high of 17.79 cents.
ICE raw sugar speculators cut net long positions by 17,330 contracts to 150,525 in the week to July 13.
Dealers cited concerns over Brazil's crop as cold temperatures return this week.
Raw sugar prices resume downtrend, coffee also lower
Citi expects raw sugar to remain range bound around 17.50 cents in the short term, underpinned by adverse weather - mostly in Brazil - and robust energy prices, though prices were capped by Indian exports.
October white sugar fell 2% to $454.10 a tonne.
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