SOFTS-Robusta coffee surges as shorts rush for cover, raw sugar up

30 Jun, 2017

COFFEE

July robusta coffee was up $77, or 3.63 percent, at $2,199 a tonne by 1204 GMT, having rallied over 5 percent to a session high of $2,231.

Dealers said the rally was prompted by shorts rushing to cover their positions ahead of Monday's first notice day, after which they could be required to fulfil their contracts.

"The shorts could have bought when the spreads were at minus $10 yesterday - but clearly they didn't and they've been caught out," said one dealer. "It's essentially a last-minute squeeze on the shorts, who might not have the coffee deliver."

This lifted the broader market, with September robusta also up $40, or 1.88 percent, at $2,172 per tonne.

Robusta has been underpinned by expectations for tightening supplies ahead of the next crop in top grower Vietnam.

September arabica coffee rose 1.85 cents, or 1.46 percent, to $1.282 per lb.

SUGAR

October raw sugar rose 0.21 cents, or 1.56 percent, to 13.71 cents per lb, after hitting a session high of 14.07 in early trade.

Prices surged 5.8 percent on Thursday and dealers said the positive close inspired fund buying in early trade on Friday.

"Finally, the music changed," said one dealer. "It's just short-covering - I don't think there's been any change in the underlying fundamentals. But, for this beleaguered market, there's a little bit of a relief here."

However, prices need to close above the 20-day moving average to pave the way for further gains next week, the dealer said.

The July contract was headed for expiry on Friday, with sizeable open interest pointing to a possible delivery of about 1.5 million tonnes.

"You can look at that as bullish or bearish," the dealer said. "But, with the spread tightening, that's probably a signal the receiver is more comfortable than the deliverer."

August white sugar also gained $2.80, or 0.70 percent, to $402.50 a tonne.

COCOA

September London cocoa rose 20 pounds, or 1.36 percent, to 1,493 pounds a tonne.

September New York cocoa rose $23, or 1.24 percent, to $1,884 a tonne.

Ivory Coast exports of cocoa beans for the season were up over 11 percent by the end of May year-on-year, provisional port data showed on Friday.

 

Copyright Reuters, 2017
 

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