Markets

Arabica coffee surges back from 16-month low, cocoa gains

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COFFEE

September arabica coffee was up 3.80 cents, or 3.26 percent, at $1.203 per lb by 1408 GMT as prices rebounded following a sharp drop in the previous session.

The contract tumbled more than 5 percent on Thursday as chart-based selling dragged prices to a 16-month low and pushed arabica's premium over robusta to the smallest since at least 2008.

Traders said the market was technically oversold on Friday, which lent chart support and inspired some corrective buying.

"The specs have just been aggressively selling," said one dealer. "Technically, we're due for a bit of a bounce. But how far do we bounce and is it going to get slammed down again is anyone's guess."

Lack of origin selling by producers was also lending some support. However, appetite from roasters remained lacklustre, dealers noted, as they sit on sufficient nearby coffee supplies.

"The industry is not panicking, they've got very good paper coverage," said one dealer. "That's the problem we've got at the moment."

September robusta coffee rose $14, or 0.69 percent, to $2,044 a tonne.

COCOA

September New York cocoa rose $31, or 1.7 percent, to $1,854 a tonne, after hitting a session high of $1,869.

A weaker US dollar helped lift prices, which have declined more than 12 percent since June 14 in the biggest six-session decline since October 2008.

"We might see prices slightly rebound and reverse direction, breaking the six-day bearish streak," Kash Kamal, senior analyst at Sucden Financial, said in a market update.

However, the gains were partly capped by a backdrop of ample global supplies and a large speculative short position in the market, dealers said.

September London cocoa was up 17 pounds, or 1.14 percent, to 1,502 pounds a tonne, tracking gains in New York.

SUGAR

July raw sugar fell 0.01 cents, or 0.08 percent, to 12.83 cents per lb, after touching a fresh 16-month low of 12.76 cents, the lowest Feb. 23, 2016.

Prices were partly pressured by favourable dry weather in top grower Brazil, which bolstered expectations for strong output from the key centre-south cane region.

August white sugar fell $0.10, or 0.03 percent, to $392.40 a tonne.

 

Copyright Reuters, 2017