London robusta coffee premiums continued to soar on Wednesday, while cocoa jumped roughly 5 percent as West African arrivals slowed. The benchmark arabica coffee contract extended its losses to another 14-month low and flirted with the psychological $2-per-lb level. Sugar was mixed in choppy, rangebound dealings.
Liffe robusta coffee dealers eyed the widening premium between the two nearby contracts. "It seems to be mainly a case of short-covering traders' March position whilst rolling into May, contributing to the blow-out in the front-month premium," said Jack Pollard of brokerage Sucden Financial. The March contract widened to close at $164 per tonne premium over May, compared with a premium of $156 per tonne at the close on Tuesday.
March robusta coffee on Liffe closed up $33, or 1.6 percent, to close at $2,143 a tonne. Arabica coffee futures on ICE fell for the sixth straight session, dropping to the lowest in 14 months and nearly reaching $2 per lb, basis May, as funds and investors liquidated longs and sold shorts, dealers said. "Roasters are really stepping up their buying needs. They're buying forward months as well, as far out as July," said one veteran coffee dealer in New York.
May arabica futures tumbled 4.70 cents, or 2.3 percent, to $2.0145 per lb by 12:49 pm EST (1749 GMT), after hitting a session low at $2.0040, the lowest since December 2010 for the second position. Total volume was heavy, exceeding 33,000 lots, preliminary Thomson Reuters data showed.
March/May spreading ahead of the spot contract's first notice day next week, helped lift volume, dealers said. Cocoa futures also saw a big move in heavy volume, but in the opposite direction, with the US market soaring well above 5 percent on growing concern about supplies as arrivals slowed in key growing region West Africa. ICE benchmark May cocoa surged $121, or 5.3 percent, to end at $2,391 a tonne. Liffe May cocoa futures jumped to close up 72 pounds, or 4.9 percent, at 1,555 pounds a tonne.
In Liffe cocoa, dealers eyed the narrowing of the discount between London's March and May cocoa contracts, which closed at 3 pounds, from 4 pounds on Tuesday. Valid cocoa stocks in NYSE Liffe's nominated warehouses fell to 59,400 tonnes as of February 6 from 91,800 tonnes on January 23, exchange data showed last week. March raw sugar futures on ICE were weak in choppy dealings, as the market remained bound between 24-25 cents. March was up 0.08 cent at 24.33 cents per lb. London May white sugar futures fell $6.10, or 1 percent, to settle at $616.70 per tonne.