Liffe August white sugar ended $3.50 higher at $818.30 a tonne on Friday. Market supported by worries over Brazilian cane output after a slow start to the harvest in the centre-south. Liffe September cocoa ended 69 pounds lower at 1,944 pounds a tonne, as the market corrected down from recent overbought positions.
Liffe September robusta coffee ended $26 lower at $2,437 a tonne. Market continues to consolidate following sharp rise in late June. Coffee and cocoa prices dipped, with concerns over risks of frost in Brazil underpinning the arabicas market. The dollar tumbled across the board on Friday as significantly weaker-than-expected US jobs data raised expectations the Federal Reserve will leave interest rates low well into next year.
Dealers also said the sharp advance in prices on Thursday, driven by reports of lower-than-expected production in top grower Brazil, may have been overdone. Disappointing yields will cut Brazil's 2011/12 production of both sugar and ethanol biofuel below last year's levels, the technical director at Brazil's cane industry association Unica told Reuters on Thursday.
Dealers said lower production was likely to lead to supply tightness in the current quarter and also heightened concern about the longer-term outlook. "A downgrade in production in Centre South Brazil this season could lead to concerns over the following crop, especially as talk has started to flag up the dry weather in the region and the problem of aging cane has not gone away," a European broker said in a daily report. Below normal monsoon rains in India, the second-largest producer and top consumer, has also contributed to the rise in sugar prices.
"It is looking remarkably different from a month ago," VM Group analyst Gary Mead said, referring to a period when October raw sugar was trading around 23 cents a lb. The market's focus in early June had been an expected large global surplus in 2011/12, which was estimated by merchant Czarnikow at that time at 10.3 million tonnes. Brazilian exports of coffee in the 2010/11 July/June season totalled 34.9 million 60-kg bags including unroasted green and soluble beans, a rise of 17 percent from 29.8 million bags shipped in the previous season, exporter association Cecafe said on Thursday.
Dealers said the market had been supported by growing concern about the crop outlook in Indonesia, the world's third-largest cocoa producer, where output may fall to its lowest since at least 2004. "It is looking bad in Indonesia. Otherwise there is nothing much to keep us up here (above $3,000)," Mead said, noting a widespread consensus there will be a large global supply surplus in the 2010/11 season. Barry Callebaut, the world's largest chocolate maker, fears rising cocoa prices could lead to a slowdown in chocolate consumption, a company official told an industry conference in Indonesia on Friday.