Robusta coffee hits 1-month peak, sugar slips
ICE cocoa futures settled firm, with a lift from the firm sterling against the US dollar, with high 2010/11 global supply seen limiting upside potential.
London second-month robustas jumped over 3.5 percent to a one-month high of $2,365 per tonne, and later lost a little ground from the peak to trade up $46 or 2 percent at $2,326 per tonne at 12:32 p.m. EDT (1632 GMT).
"There isn't very much origin selling. Vietnam has sold off most of its crop and if they've got anything left they're holding it back," said a London-based broker.
Vietnam is the top robusta producer.
Arabica coffee futures on ICE rallied over 2 percent on short-covering on strong volume, with activity centered on September/December position rolling ahead of September's first notice day on Aug. 23.
"We avoided making a new low for almost a week under some turbulent circumstances and I think that's given a little rise to some short-covering activity," said Sterling Smith, analyst for Country Hedging in Minnesota.
"That also brought some buyers back into the market here in general."
December arabica coffee on ICE jumped 5.55 cent, or 2.3 percent, to $2.4940 per lb, remaining up from last week's 6-1/2-month low at $2.3530 but facing strong resistance just above the 200-Day moving average around the session high at $2.5175.
A cold high-pressure system is expected to move into Brazil later on the upcoming weekend. While it should remain well south of the country's coffee belt, it will bear watching, forecaster Telvent DTN said.
ICE October raw sugar futures were weak in thin volume on a lack of news. The desire by players to see how the macro environment evolves kept many on the sidelines for now, while the recent reduction of the speculative net long position gave the market a bearish feel.
While news on Brazil's small, reduced sugar crop is supportive and fundamentals are "constructive," said Alex Oliveira, senior sugar analyst at brokerage Newedge USA, those factors have has already been priced into sugar's equation.
"Everybody knows about Brazil's (lower) production," he said, adding news about India's possible sugar exports is also a known factor for the market.
October raw sugar on ICE reversed down 0.19 cent to 27.65 cents, while October white sugar on Liffe fell $7.80 to $735.70 per tonne.
Commerzbank said in a daily market report that speculative net longs in sugar had reached their highest for two years at the end of July, at 165,000 contracts, then fell again lately. It said it envisaged a raw sugar price at 26 cents at year end.
Cocoa futures on ICE firmed on short-covering and a lift from the firm pound, which in turn limited gains on the Liffe market. Some September/December spreading continued ahead of the spot contract's first notice day on Aug. 18.
"The firmer equity markets and the general feeling of a little bit of stability today is probably chasing a few of the weaker shorts out of the market and that's producing a bit of a rally," Country Hedging's Smith said.
US stocks rose more than 1 percent, feeding on acquisition news and hopes European politicians will come up with solutions to the region's debt crisis.
December cocoa on ICE closed up $24 at $2,931 a tonne, while Liffe December cocoa inched up 1 pound to end at 1,853 pounds per tonne.
Copyright Reuters, 2011