Arabica coffee extends short covering rally, sugar also up

LONDON: Arabica coffee futures on ICE rose on Thursday, extending their rebound from 13-year lows set earlier this week, while raw sugar prices also advanced.

COFFEE

May arabica coffee was up 1.05 cents, or 1.1 percent, at 96.40 cents per lb by 1421 GMT, climbing further away from the 13-year low of 91.25 cents set on Tuesday.

Dealers said the rebound was driven by short covering but the scope for any further grains may be capped by oversupply following a huge crop in Brazil last year.

They noted prospects for this year's Brazilian crop also remained favourable.

"For the price really to recover in any lasting fashion there would need to be clear signs that less supply is available not only temporarily and as a result of exchange rates. Yet there is no evidence that this is the case just now," Commerzbank said in a market note.

The International Coffee Organization on Thursday raised its estimates for the size of global coffee surpluses for both the 2017/18 and 2018/19 seasons.

May robusta coffee was down $3, or 0.2 percent at $1,454 a tonne.

Domestic coffee prices in Vietnam bounced back, tracking the recovery in London, after hitting their lowest in three years earlier this week, while the Indonesian premium expanded from last week.

SUGAR

May raw sugar rose 0.31 cent, or 2.5 percent, to 12.73 cents per lb, boosted partly by further gains in the crude oil market.

Brent oil prices resumed their climb towards $70 per barrel as expectations of tight global supply outweighed pressure from rising U.S. inventories and production.

Dealers said talk that Thai millers still have a lot of sugar to price was keeping a lid on prices.

"The weakness of the Real has prompted millers to increase their level of cover to a higher percentage than usual in CS Brazil, but this is more than offset by talk that Thai millers are well behind on their pricing this year," Sucden Financial senior trader Nick Penney said.

May white sugar was up $4.60, or 1.4 percent, at $331.80 a tonne.

COCOA

May London cocoa rose 21 pounds, or 1.2 percent, to 1,801 pounds a tonne.

May New York cocoa was up $39, or 1.6 percent, at $2,415 a tonne.