Arabica coffee futures on ICE reversed course and turned lower after hitting a six-week high on Thursday, while Liffe's robusta slipped from a five-week high and cocoa prices also fell, as investors liquidated in tandem with tumbling US grain markets. Raw sugar was also weak, due to large European crops and the region's suspension on tenders in January and February.
"The USDA (US Department of Agriculture) was bearish for the grain markets, so corn's limit down and that's taken some speculative money out of the markets," said Drew Geraghty, commodity broker at ICAP North America in Jersey City, New Jersey. "There's a lot of long liquidation coming in here with some profit-taking in coffee as well." Arabica coffee futures on ICE firmed on short covering, taking them to the highest level since Dec. 1, but turned lower after the Chicago Board of Trade grains markets opened and moved sharply lower. March arabica changed direction and closed down 1 cent, or 0.4 percent, at $2.3390 a lb, after hitting a six-week high at $2.3850.
Dealers said the market remained underpinned by diminished prospects for the 2012/13 crop in Brazil, following a spell of dry weather, although it is still likely to reach a record level. Robusta coffee futures on Liffe pared their gains, as the market extended its rebound from Monday's 14-month low. March robusta coffee settled up $47, or 2.6 percent, at $1,885, after reaching a five-week high at $1,925. The contract hit $1,712 on Monday, the lowest level for the benchmark second month since October 2010.
ICE March cocoa futures settled down $24, or 1 percent, at $2,326 a tonne, falling below Wednesday's peak of $2,388, which was the highest level for the front month since mid-November. "Short covering has been met by profit taking and hedging," a senior cocoa futures dealer said. Cocoa futures rallied this week due to concerns over the slowdown in bean arrivals and dry weather in Ivory Coast.
March cocoa on NYSE Liffe eased 17 pounds, or 1.1 percent, to close at 1,545 pounds a tonne. Raw sugar futures on ICE were weak but rangebound in choppy dealings after last week's failed attempt at an upside breakout. The market failed to move up on the USDA's monthly supply/demand report showing a stocks-to-use ratio of 5.3 percent, way below the level of 15 percent considered adequate by the government. At that level, dealers said the United States would have to look at additional sugar imports.
"The US doesn't matter in the global scheme of things," said Bill Raffety, senior analyst at futures brokerage Penson Futures in New York. March raw sugar on ICE dropped 0.42 cent, or 1.8 percent, to 23.27 cents a lb. London March white sugar futures finished up $2.40, or 0.4 percent, at $620.60 per tonne.