Liffe March robusta coffee ended up $57 at $2,167 a tonne on Wednesday after earlier climbing to a peak of $2,185, the highest level for the second month since September 2008. Rise driven by fund and roaster buying. Market supported by concern about the outlook for Indonesia's crop with rains seen hurting yields.
Liffe May cocoa closes 12 pounds higher at 1,985 pounds a tonne. Demand for chocolate recovering after the financial crisis but strong flow of cocoa out of West Africa helping to keep a lid on prices. Liffe March white sugar ended $26.40 lower at $781.00 per tonne. Market remains very choppy as dealer wait for clarity on the outlook for exports from India.
London robusta coffee futures climbed to a 2-1/4-year high on Wednesday, boosted by fund and roaster buying, a softer dollar and prolonged rains in Indonesia. Slowing sales from top robusta producer and exporter Vietnam and concerns about the outlook for the 2011 arabica crop in key producer Colombia also lifted coffee markets. "The London robusta market is the lead market today (in softs). It's undervalued (to arabicas), and it's going higher," a London-based trader said.
"There's been some fund buying and some roaster b5ying." Robusta bean prices on Vietnam's domestic market rose around 2 percent from the previous day to 38.2 million dong ($1,959) a tonne on Wednesday, the highest since March 2008, and trading has slowed, traders said. Technical levels were breached when the contract closed above $2,084 on Tuesday, a trader said, signalling it was likely to climb further, with the December 30 high of $2,152 providing support.
Adverse weather heightened concerns about supply tightness after Indonesia's weather agency said on Wednesday the rainy season will continue until June, hurting the coffee harvest. "It's the rain in Indonesia that's the underlining driving factor right now, hurting yields," said Kona Haque, a commodity strategist at Macquarie Bank. Cocoa futures edged up, though a strong flow of beans from West Africa kept the market under pressure, dealers said.
Swiss chocolate maker Barry Callebaut Ltd said cocoa bean deliveries were flowing as expected from top grower Ivory Coast, where violence related to a disputed election had initially led to fears of supply disruptions. "Our two factories in the Ivory Coast are up and running. Cocoa deliveries are arriving at the factories as planned and exports are also going well," Chief Executive Juergen Steinemann said in an interview on Wednesday. Europe's grind, which may be issued later this week, could be flat to marginally lower while the US grind, anticipated next week, should be slightly above year earlier levels.