LONDON: Arabica coffee futures on ICE rose on Wednesday, extending the prior session's sharp climb and boosted by fund short covering and a slight recovery in the value of Brazil's real currency.
COFFEE
July arabica coffee was 0.70 cents, or 0.75pc, higher at 93.60 cents per lb at 1409 GMT after rising by more than 3 percent on Tuesday.
"Funds seem oversold in coffee and other agri commodities, making us mildly bullish," Rabobank said in a quarterly coffee report issued on Wednesday.
Speculators are holding net short positions in arabica and robusta coffee as well as raw and white sugar and New York cocoa, according to the most recent Commitments of Traders data.
Rabobank forecast there would be a global coffee surplus of 5.4 million 60 kg bags in the 2018/19 season although a shift to a deficit of 1.8 million bags was projected for 2019/20.
"Lower prices should result in lower 2019/20 washed arabica crops, whereas for robustas, availability is now higher due to excellent weather," the bank said.
July robusta coffee rose $3, or 0.2pc, to $1,367 a tonne.
SUGAR
July raw sugar fell 0.04 cents, or 0.3pc, to 11.77 cents per lb although prices remained well above the prior session's 7-1/2 month low of 11.36 cents.
Dealers said the market was underpinned by the prospect of a pick-up in exports of Brazilian raw sugar to China following the resolution of a dispute about tariffs.
Brazil will no longer seek a panel at the World Trade Organization (WTO) to investigate China's sugar trade policies, the Brazilian government said on Tuesday, smoothing commercial relations with its top trade partner.
"We think that all the negative news has now been digested and the market will begin to look at the positives," broker Marex Spectron said in a report, noting a potential global deficit in the 2019/20 season among other supportive factors.
August white sugar was down $1.20, or 0.4pc, at $325.10 a tonne.
Egypt's state buyer ESIIC bought 50,000 tonnes of raw Brazilian sugar, traders said on Wednesday.
COCOA
July London cocoa rose 7 pounds, or 0.4pc, to 1,778 pounds a tonne, underpinned by the weakness of sterling.
Sterling fell broadly on Wednesday and was on track for its longest ever losing streak against the euro as Prime Minister Theresa May's last-ditch Brexit plan failed to win over either opposition lawmakers or many in her own party.
July New York cocoa fell $7, or 0.3pc, to $2,439 a tonne.
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