Liffe July robusta coffee closed $27 higher at $2,425 a tonne on Tuesday, supported by strength in the arabica market as ICE prices climbed toward the 34-year peak hit in March on a shortage of quality beans. Liffe August white sugar rose $3.00 to close at $625.00 a tonne as large crops from key producers Brazil and Thailand capped gains.
Liffe July cocoa ended 2 pounds lower at 1,929 pounds a tonne as dealers awaited news the state of the mid crop from top producer Ivory Coast. Cocoa futures settled mixed as dealers awaited information on the resumption of exports from top producer Ivory Coast, while sugar corrected higher after Monday's fall. Arabica coffee prices have risen nearly 15 percent in the past two weeks, climbing up from a nearly two-month low, as the market resumed its uptrend buoyed by tight supplies and speculative buying. "It's a favourable chart pattern. It looks like we had a major bull flag and we started rallying every day, basically," said Jack Scoville, analyst with The Price Futures Group in Chicago.
Fundamentally, dealers said the high prices underlined the tight balance sheet seen in 2011/12. "The Sao Paulo (coffee) market has been holding at least as strong as New York," Scoville said. "I was hearing that they've basically sold all of their crop (2010/11), so if that's the case that would be holding it higher." "The coffee rally is a continuation of the long-term bull trend with buyers finding less and less selling from producers," one US trader said.
Buying came from roasters, investors and the trade, he said. "These prices have drawn a lot of coffee out of Central America. Over the last couple of weeks the export numbers coming out of the Central American countries were up staggeringly compared to last year," said Keith Flury, commodities analyst at Rabobank. "People are anticipating that next season's crop is not going to be enough to meet demand. There's also a lot of risk premium associated with the (current) Brazilian crop, which looks good now but there's still a lot of weather ahead of us." India on Tuesday forecast normal rains for the 2011 monsoon, strengthening the prospects of a plentiful farm output that could help bring relief to Asia's third-largest economy in its battle with high prices.